Posted by: Catherine | December 20, 2007

Mortgage Forgiveness Debt Relief signed into law


Fantastic news and perhaps a great start to a new year for many families facing the loss of their homes and the added stress of a possible tax liability on the amount of debt forgiven by their lenders.  If you’ve been following our blog you know that we’ve been waiting for this to pass the President’s desk for signature, and today, President Bush has signed this relief into law.

The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) eliminates tax on debt forgiveness recognized on short sales, foreclosures and deed in lieu of foreclosure arrangements.  

The National Association of Realtors (NAR) released a statement today.  In part:

“NAR has been advocating for such a change to the IRS tax code for nearly 10 years. We have always believed that it is clearly an issue of fairness and of not kicking people when they are down. By making the forgiven debt taxable income, individuals in already unfortunate situations most likely faced IRS actions because they did not have the money to pay the additional taxes. This legislation will relieve that additional burden and may also encourage families to work with their lender to negotiate terms, knowing they will now not be subject to an IRS bill.

“Today’s bill will ensure that any debt forgiven on a mortgage secured for a principal residence will not be taxed. This is very significant legislation. This may also mean that some day in the future these families can once again achieve the dream of homeownership.”

To read the entire statement, click HERE.

You can track the progression of this debt relief proposal thru the house, senate, etc. by clicking HERE.

Summary of H.R. 3648 Mortgage Forgiveness Debt Relief Legislation:
http://waysandmeans.house.gov/media/pdf/110/Markup%20Summary4.pdf
Get expert advice in Contra Costa County from your lender, your accountant and/or an attorney to know YOUR options particular to your situation.  Then contact, Catherine Myers or Terry Osburn to discuss your short sale, foreclosure or other options for financial difficulity in home ownership.  Get information about what lenders need from you.  Get a short sale checklist.  Get information on hardship situations and hardship letters and much more. We also may have phone numbers and contact information for the loss mitigation departments for your bank or mortgage lending institution. So call us for more information.


Responses

  1. […] helps you avoid a damaging foreclosure on your credit report, but with it can come a tax liability (**see recent post on the latest on this topic) on the foregiveness of debt. It can be a lengthy and cumbersome process with lenders strict […]


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