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Mortgage - Fix Break Ends - Higher Taxes?

The break, passed in 2007, helps homeowners who seek debt forgiveness when they owe more on their mortgages than their homes are worth.
A tax break set to expire at the end of the year could mean big tax bills for some struggling homeowners.

The break, passed in 2007, helps homeowners who seek debt forgiveness when they owe more on their mortgages than their homes are worth.

The bank can sometimes cut families a deal by reducing the principal or forgiving the mortgage balance after a "short sale"-- where the seller owes more than the final price.

Under traditional IRS law, the amount of the debt forgiveness is considered taxable income.

Now that the break is set to expire, people who take advantage of such debt forgiveness could end up owing big bucks.

Experts say a return of the tax could damage the ongoing recovery of the housing market.
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