There could be some good news on the horizon for people facing foreclosure, yet worried about being hit with taxes after the sale.
Currently, when someone goes through a short sale on their home, the homeowner would receive a Form 1099-C in the amount of the forgiven debt, being responsible for income tax on the amount of debt written off. This just adds further stress to the situation. With the current foreclosure market in this country, this bill would help people get back on their feet.
The NAHB, or National Association of Home Builders, as written a great article detailing this bill.
"Addressing the subprime lending crisis, the U.S. House of Representatives on Oct. 4 approved legislation that would eliminate any taxes home owners might face when banks renegotiate the terms of a home loan and forgive a portion of the outstanding mortgage debt. The change in the tax law would cap untaxable forgiven debt at $2 million and apply only to principal residences."
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