President Bush signs Mortgage Forgiveness Debt Relief Act of 2007.

By
Real Estate Agent with eXp Realty

President Bush signs Mortgage Forgiveness Debt Relief Act of 2007 this week.

The bill will eliminate income tax on mortgage debt that has been forgiven by lenders on primary residence for people in financial hardships.  In other words the IRS will no longer collect money from people who have worked out a deal with their lenders or after a short sale. The bill gives this debt relief for a period of 3 years a compromise between the House who wanted it permanently and the Senate and the President.

This will provide much needed relief to people losing their homes. As it stands now, a lender who forgives a debt must provide provide a Form 1099 to the IRS stating the amount the borrower has been forgiven. The rules apply whether it is a short sale, foreclosure, deed in lieu of foreclosure or any arrangement that relieves the borrower of the obligation to pay some portion of their debt. If the property is sold at foreclosure or is sold for less than was borrowed as in a short sale, the difference is considered income and is subject to the tax.

If someone sold their home with lenders approval for $25,000 less than they owe on the property, the IRS taxes that $25,000 as income. This will no longer be the case for the next years.

President Bush said "With this bill, Congress has taken a strong step to address the turbulence in the housing market. Yet there's more work to be done" at the signing

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Tags:
misc ramblings from your bellingham real estate pro

Spam prevention
Show All Comments
Rainer
407,471
Sean Allen
International Financing Solutions - Fort Myers, FL
International Financing Solutions

That will be a good relief for many people. Lots of folks just got a very nice christmas gift from GW.

Sean Allen

Dec 21, 2007 08:47 AM #1
Rainmaker
1,049,646
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F
They should have done this along time ago.  The only thing that concerns me is whether the lenders can still write-off this debt off as a loss on the lender's tax returns.
Dec 21, 2007 08:53 AM #3
Rainmaker
286,993
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

To help you with details - see my blog today at http://activerain.com/blogsview/315203/MORTGAGE-FORGIVENESS-ACT-2

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales

Dec 22, 2007 12:31 AM #4
Rainmaker
720,762
Teri Eckholm
Boardman Realty - White Bear Lake, MN
REALTOR Serving Mpls/St Paul North & East Metro
Michael--The bill won't solve everything but it is a start.
Dec 23, 2007 12:41 AM #5
Rainmaker
467,431
Michael Eisenberg
eXp Realty - Bellingham, WA
Bellingham Real Estate Guy

Sean Allen & Pilar

Michael

Rob

Richard

Teri

Thanks for stopping by, hopefully things will just keep getting better

Dec 23, 2007 07:04 AM #6
Rainer
85,510
Lance Winslow
The Car Wash Guy - Malibu, CA
President Bush is probably the best President we have ever had. Lance.
Dec 28, 2007 08:43 PM #7
Rainmaker
467,431
Michael Eisenberg
eXp Realty - Bellingham, WA
Bellingham Real Estate Guy
Lance: Are you for real, I think President Bush is just the opposite
Dec 29, 2007 08:37 AM #8
Anonymous
Renee

 

 

Does President Bush Mortgage forgiveness for short sales apply to investors, or is this only for homeowner? 

Feb 20, 2008 04:39 PM #9
Rainmaker
467,431
Michael Eisenberg
eXp Realty - Bellingham, WA
Bellingham Real Estate Guy
Renee: As far as I know only homeowners
Feb 21, 2008 02:47 AM #10
Rainmaker
286,993
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Renee -  See my blog about 5 comments above -- the answer is only those that can call the house their primary residence.  The definition is in my blog link http://activerain.com/blogsview/315203/MORTGAGE-FORGIVENESS-ACT-2

 

Feb 21, 2008 03:40 AM #11
Rainmaker
53,867
Ryan Bretzel
Keller Williams Premier - Stillwater, MN

Hey Michael,

Maybe you can help me and many others out in giving me your opinion in regards to presidential candidates.  Read my blog at http://activerain.com/blogsview/464428/Who-is-the-best

Apr 11, 2008 05:47 AM #12
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
467,431

Michael Eisenberg

Bellingham Real Estate Guy
Want to find the most affordable homes in Bellingham?
*
*
*
*
Spam prevention

Additional Information