Do a North Las Vegas Short Sale This Year -Mortgage Forgiveness Debt Relief Act Expires in 2012

By
Real Estate Agent with HomeSmart Encore - Las Vegas
https://activerain.com/droplet/tmk
The time is limited for homeowners who want to ensure they aren’t hit with a big tax bill because they had to walk away from a mortgage obligation.

Congress passed the Mortgage Forgiveness Debt Relief Act of 2007, designed to provide at least some consolation to folks who had lost their homes.

If you borrow money and the lender then cancels or forgives the debt, you generally have to include the canceled amount as income for tax purposes. As the IRS explains, you aren’t taxed on borrowed money because you have an obligation to repay it. However, if the debt is wiped out, the lender is then required to report the amount of canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

You can imagine the frustration that many people had with this seemingly unfair tax rule. They had lost their homes and then discovered in a “you’ve-got-to-be-kidding-me” moment that they owed taxes on the forgiven debt.

That’s where the mortgage debt relief act comes in. It allows people to exclude income from the discharge of debt on their principal place of residence. In addition to foreclosure, debt reduced because of a mortgage restructuring also qualifies for relief under the new law. The law says that only debt forgiven in calendar years 2007 through 2012 is eligible. Up to $2 million of forgiven debt qualifies for this exclusion ($1 million if married filing separately). To get the relief, debt must have been used to buy, build or substantially improve a principal residence and be secured by that residence. So if you refinanced and took money out of the house to pay off credit card debt, you won’t receive the exclusion. Debt forgiven on second homes, rental property, business property, credit cards or car loans also does not qualify for the tax relief.

Previously blogged: Short Sale Your Home Before the end of 2012-Mortgage Forgiveness Debt Relief Act Expires in 2012

 

Dawn Barrier Las Vegas SHORT SALE SPECIALIST,Las Vegas Short Sale Realtor® Website

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Dawn Barrier at HOMESMART ENCORE Las Vegas, Nevada   

 

(702) 812-4550 

 

Las Vegas, Nevada   

January 2020

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Any Stats are on Resale Single Family homes only per the GLVAR MLS as of this writing or as noted,covers the Las Vegas Valley, North Las Vegas, Henderson area or as noted.

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