Mortgage Debt Relief Act Extended
On January 1, 2013, Congress passed an extension of the Mortgage Debt Relief Act of 2007.
Mortgage Forgiveness Debt Relief Act Explained
- Originally passed in 2007, the Act was an effort to aid millions of homeowners who suddenly found themselves on the verge of foreclosure.
- Under the Act, the debt forgiven in a short sale, foreclosure or loan modification is exempt from federal taxes. Without the protection of the Act, a bank which forgave, or canceled, debt was legally required to report the amount of debt forgiven to the IRS.
- The IRS labeled this amount as “income”, even though the homeowner didn’t actually receive any cash from the bank. The homeowner was then responsible for paying income tax on this amount, which could easily amount to tens of thousands of dollars.
Frequently Asked Questions
When Does the Mortgage Debt Relief Act Expire?
December 31, 2013
How Much Debt Can Be Forgiven?
$2 million ($1 million if married, filing separately)
Does this Apply to Any Debt Forgiven?
No, it applies only to debt forgiven on a primary residence
Will it be Reported to Credit Agencies?
If a foreclosure was started, then probably so, although the negative impact will be less than if the foreclosure were completed.
What Does the Extension Mean for You?
If you are struggling with your mortgage payment and facing the possibility of foreclosure, it means you have options. By taking advantage of the various foreclosure alternatives currently available, you can get back on your feet more clearly. For more information, download our special report.
Each month we publish a special report just for distressed homeowners. You can always see the current report by visiting ForeclosureOptionsToday.com and see all the archives at the Resources tab. We’re here to help.
One of the Most Important Things to Know
The sooner help is sought, the more options are available, and the greater chance of success.
As a real estate professional who has earned the Certified Distressed Property Expert (CDPE) designation, my mission is to provide financially strapped homeowners with alternatives to foreclosure, help them steer clear of scams, and assist them in finding the solution that best meets their needs.
These are tough times, but more help is available than ever before. If you or someone you care about needs freedom from the frustration of a mortgage they can’t pay, contact me today and let’s get started.
Always obtain legal and tax advice before making a decision about your financial future.