NAR: Debt Forgiveness Should be Permanent Part of Tax Code

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Posted To: MND NewsWire

Prior to the housing crisis, homeowners who defaulted on their mortgages faced tax consequences if their lender had to write off or write down any part of the outstanding balance . That often happened after the collateral was sold after a foreclosure, deed-in-lieu, or short sale, and write-downs were sometimes included as part of a mortgage modification as well. The deficit amounts were reported to the IRS as forgiven debt and were subject to being taxed as income. In 2007, as the numbers of distressed mortgages was mounting, Congress put a temporary policy in place to exclude forgiven home mortgage debt from any tax obligation . That exclusion has been extended several times. It expired in 2017, but early this year it was extended retroactively to cover the previous year The National Association…(read more)

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