Was there any good news for Distressed Homeowners as we waited for politicians to avoid taking us over the Fiscal Cliff? Yes! The Mortgage Forgiveness Debt Relief Act was extended through December 2013. All of our Clients can breathe a sigh of relief. What does this mean to homeowners who are under water on their Principal Residence and thinking about listing their homes; and for those already under contract? Well, it means continue as planned and move forward.
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007. The Act was designed to help distressed homeowners find relief from cancelled debt. According to the www.IRS.gov website:
“If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”
Get answers to some of the most frequently asked questions regarding the Mortgage Forgiveness Debt Relief Act and Debt Consolidation such as:
What is Cancellation of Debt? | Is Cancellation of Debt income always taxable? | What is the Mortgage Forgiveness Debt Relief Act of 2007? | What does exclusion of income mean? | Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts? | Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home? | If the forgiven debt is excluded from income, do I have to report it on my tax return?
There are many more questions and answers regarding the Debt Relief Act that apply to individuals each with their own circumstances so when it comes to the Debt Relief Act and Debt Cancellation individuals should consult a tax consultant and an attorney.
Call the Kathy Toth Team your Ann Arbor Distressed Property Experts!
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