In 2007 Congress passed legislation to assist troubled homeowners. One provision removed the requirement that the seller pay taxes on the amount of debt forgiven by the lender in a short sale. This legislation expires December 31st, 2012. Unless Congress grants an extension the seller may be obliged to pay taxes applicable to his/her tax bracket on the amount forgiven. This is a development that all of us are watching closely. Recent efforts to facilitate short sales for sellers may indicate a hopeful prognosis for an extension.