In late December Mortgage Forgiveness Debt Relief Act of 2007 came into existence which is meant to provide tax help for people who are selling their house in a short sale or are facing foreclosure.
Before this Act, if value of house declined & lender forgave any portion of your mortgage debt, according to tax code forgiven amount was treated as income and was taxable.
If it is your principal residence & not a investment property or second home then as per MFDR Act you can exclude up to $2 Million of mortgage loan debt forgiven in years 2007, 2008 or 2009. Additionally, this debt relief will be applicable for acquisition indebtedness only.
Tuesday, February 5, 2008
Mortgage Forgiveness Debt Relief Act
