Posted by: Catherine | January 22, 2008

Mortgage Debt Relief Act (HR 3648)- Will it help you?


As more and more people are contemplating the possibility of foreclosure or a short sale on their homes, many feel “safe” that they may not owe taxes following the forgiveness of the debt by their lender(s).  Be sure you do your homework, carefully. Hiring a short sale specialist to help you negotiate the terms with your bank is important.  Many terms are negotiable with the lender, and you MUST know what to ask for to protect yourself.  Protect yourself from what you ask?  From recourse, deficiency judgements or tax bills.  Further, you must know what this Mortgage Debt Relief Act really means. It is NOT the cure-all and it is not even an option for all.  It does not encompass all “mortgage debt,” so be careful.  Take very careful note as to who this Act will help, and/or who it will not.   If you have refinanced your mortgage, have a second, a third or if this is an investment property – you may or may not fall under the protection of this act.

As we always say, enlist the counsel of an experienced attorney and for tax implications, get expert advice from an income tax professional (CPA). 

Here is a White House press release about this Act for more information:  IRS link about Mortgage Debt Forgiveness and Debt Cancellation


Responses

  1. […] Mortgage Debt Relief Act (can it help you?) […]

  2. […] IRS has already pass legislation in the Mortgage Debt Forgiveness Act of 2007 (HR 3648) and was meant to exempt certain sellers from Federal Income tax on the forgiven debt when their […]


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