MIAMI (CBS4) – Time is ticking for the Senate and the House as they meet Sunday in a last ditch effort to avoid the fiscal cliff.

The term fiscal cliff refers to more than $500 billion in tax increases and across-the-board spending cuts scheduled to take effect after January 1st.

Taxes will rise for nearly every tax payer as well as many businesses.

That includes all of the Bush-era rate reductions, smaller tax cuts that periodically expire for businesses and individuals.  It also includes the two-percentage-point cut in payroll taxes that President Barack Obama pushed back in 2010.  That cut increased an average worker’s take-home pay by about a thousand bucks a year.

If lawmakers in Washington don’t reach a deal, South Florida’s housing market could also take a real hit in the area of short sales which have helped the struggling market to improve.

The Mortgage Debt Relief Act that is in place erases taxes on selling a home that is underwater.  That act would expire if a deal cannot be reached.

Real estate exert Ashley Cusack said the Mortgage Debt Relief Act is essential at this time.

“There’s incentive and it benefits everybody; gets the property off the banks records and it gets the person out from under it and it does it in a healthy manner,” said Cusack.

Short sales also help banks avoid the legal costs of seizing a home and the extended expense cost of maintaining it.