Short sales surge as distressed homeowners fear a tax-break expiration

The act is important because that it allows distressed homeowners who short sale their homes from paying income taxes on the difference in the amount they sell their homes for and the amount they actually owe on the mortgage. The lender agrees to "forgive" this amount However, IRS considers it as income to the homeowner and should be taxed, even though the homeowner does not receive any money. If the act is not extended, the unpaid amount will be subject to being taxed.