Write Your Congressmen/Senators!: For those of you who are, or have recently, undergone a foreclosure, short sale or principal reduction in your mortgage(s), an important date is soon to arrive. It's December 31, 2012. What, besides New Year's Eve, is so important about that date? It's the date that the Mortgage Debt Relief Act of 2007 is set to expire. If you're not familiar about the law, this is the federal law that Congress passed in 2007 to help homeowners avoid income tax liability on any amounts of mortgage debt written off by a lender in a short sale, foreclosure or principal reduction. Under already existing law, ANY debt that is forgiven by a lender is considered taxable income in the year it's forgiven. Worse, it's taxed at regular tax rates. So, let's say you did a short sale for $50,000 less than the amount of your mortgage. That means that the bank holding your loan forgave $50,000 and you would normally have to pay tax on that fifty grand as if you'd earned it as salary! Bad enough you lost your home--you then had to pay taxes on it as well! Well, Congress in 2007 passed the aforementioned law to help homeowners like you avoid such a tax obligation if you fit within a very broad set of parameters. (Check with your CPA.) So, getting back to the start of this item, that law is set to expire at year end. So far, fortyone state attorneys general have written to Congress asking for the law to be extended. DON'T SIT BACK AND WAIT FOR ACTION! CALL OR WRITE YOUR US SENATORS AND CONGRESSIONAL REPRESENTATIVES & TELL THEM YOU WANT THE LAW EXTENDED! DON'T WAIT! I know it's Thanksgiving and then you have to shop for the holidays. But the law will expire if nothing is done about it! CONTACT THEM NOW! The tax you save may be your own! Good luck.