Mortgage Tax Relief……Up To $ 2,000,000 May Not Be Taxable
August 31st, 2008 Categories: Taxes, Taxes and Taxes
The Mortgage Forgiveness Debt Relief Act of 2007 may allow up to $2,000,000 debt forgiveness on a principal residencefor married couples (it is $ 1,000,000 for a married person filing seperate) for a limited time period.
If your mortgage debt is partly or entirely forgiven for the years ending 2007, 2008 or 2009, you may be able to claim this special tax relief.
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.
The debt must have been used to buy, build or substantially improve your principal residence and must have been secured by that residence.
Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.
Debt forgiven on second homes, rental property, business property, credit cards or car loans do not qualify for this special tax-relief provision. In some cases, however, tax relief based on insolvency or other special provisions of the tax law may be available.
A form 1099-C will be issued if your debt is reduced or eliminated. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.
If you have debt or mortgage relieved for the years 2007, 2008 and 2009, do talk to your attorney, CPA or tax preparer to determine the impact on your individual tax liability and explore any mitigating options that you may have.
Source of information: Tax and Business Strategies, September 2008.
Your comments are welcomed.
