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002.01.10 Clarification: Tax Relief Still in Effect for Mortgage Forgiveness

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An important clarification for any homeowners facing the unfortunate possibility of a short sale or foreclosure: The Mortgage Forgiveness Debt Relief Act of 2007 was in fact extended through December 31st 2012 (before the 2008 elections, it had been due to expire December 31,2009).  Without the bill, when lenders forgave any debt on a property, homeowners were normally taxed on the sum forgiven.  This bill provides tax relief to sellers whose mortgage on their primary residence was entirely or partly forgiven by their lender(s), and is limited to loan balances of $2 million or less (or $1 million for a married person filing a separate return).   Also, qualifying debt is defined as that used to buy, build, or substantially improve a principal residence, or that used to refinance any qualifying debt (but only up to the amount of the mortgage principal prior to refinancing).   More details can be found at http://bit.ly/21xuw3 http://bit.ly/JGuun.   Please consult with an accountant for specifics.

[Via http://njhomechat.com]
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