WASHINGTON — Struggling homeowners could be hit with an unexpected tax bill in the new year.
A law that spared people who owe more than their homes are worth from being saddled with extra taxes when their banks provide mortgage relief is expiring next week. Congress hasn’t extended it.
Underwater homeowners often try to negotiate with their bank so that they can sell their homes for less than they owe in a short sale or have their mortgage balance reduced. But the difference between what the homeowner owes and the lower sales price approved by the bank is considered income for the homeowner and subject to tax by the Internal Revenue Service. Full story for BostonGlobe.com subscribers.