Mortgage debt relief extension closer to reality

The Senate Finance Committee has passed a two-year retroactive extension of a law that allowed homeowners to avoid being taxed on debt forgiven in a short sale or through a principal reduction, Realtor Magazine reported.

The extension still needs to be passed by the full Senate and by the House of Representatives. The federal Mortgage Forgiveness Debt Relief Act of 2007 expired on Dec. 31, 2013, despite strong bipartisan support.

In addition to mortgage debt relief, there are some promising signs that Congress may pass extensions of other popular housing-related tax benefits sometime this spring, including write-offs for energy-saving improvements and mortgage insurance premiums.