IMAG1262[1]Merry Christmas and Happy Holidays from the U.S. Treasury Department. As we all know, the Mortgage Debt Forgiveness Act was set to expire at the end of 2015. This law grants tax relief when there mortgage (debt) forgiveness in a short sale. Debt relief is treated like income and is taxable. The Mortgage Debt Forgiveness Act was included in the fiscal 2016 federal appropriations and tax relief bill and was signed into law December 18, 2015. The Short Sale tax break lives on! “A Merry Christmas to us all; God bless us, every one!” Tiny Tim, circa 1850.