DEBT RELIEF ACT
Privately sponsored initiative encourages homeowners take advantage of the Mortgage Forgiveness Debt Relief Act of 2007 (summarized below) which has been extended through 2012 through the Emergency Economic Stabilization Act of 2008.
Mortgage Forgiveness Debt Relief Act of 2007
Amends the Internal Revenue Code to exclude from gross income amounts attributable to a discharge, prior to January 1, 2010, of indebtedness incurred to acquire a principal residence. Limits to $2 million the excludable amount of such indebtedness. Reduces the basis of a principal residence by the amount of discharged indebtedness excluded from gross income. Disallows an exclusion for a discharge of indebtedness on account of services performed for the lender or any other factor not directly related to a decline in the value of the residence or to the financial condition of the taxpayer. Sets forth rules for determining the allowable amount of the exclusion for taxpayers with nonqualifying indebtedness and taxpayers who are insolvent.
Extends through 2010 the tax deduction for mortgage insurance premiums.
See your tax accountant for details on this subject.