A tax break enacted by Congress in 2007 which exempted homeowners from taxes on aid received from banks such as reductions in mortgage debt and short sales has expired, The LA Times has reported. The law expired at midnight on Tuesday in spite of bipartisan support, because Congressional lawmakers went home without extending the break.
Legislation pending in the House and Senate would extend the tax break through 2015, and lawmakers could take up the issue as soon as next week, The LA Times reported.
Should Congress not move to extend the tax break, housing advocate Kevin Stein of the California Reinvestment Coalition told The Times troubled homeowners could be further impacted.
"It's a hit on people who are meant to be helped. It is a big deal and it would be very unfortunate if, due to Congress' inability to act, people will suffer," Stein said.
Despite bipartisan support, a tax break for struggling homeowners has been allowed to expire.