The Mortgage Forgiveness Debt Relief Act and Debt Cancellation.

By
Real Estate Broker/Owner with Real Property Management of Sarasota & Manatee
https://activerain.com/droplet/M5y

Real Property Management of Sarasota & ManateeThe Mortgage Forgiveness Debt Relief Act and Debt Cancellation

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

Real Property Management of Sarasota & Manatee is the local affiliate office of the greater company, Real Property Management. Real Property Management is the largest residential property manager in the world having 250+ offices in the U.S. and Canada, and over 60,000 units under management. Real Property Management of Sarasota & Manatee works with the owners of condominium units, single family homes, duplex/multiplex units, and apartment complexes in: Sarasota, Bradenton, Venice, Lakewood Ranch, Parrish, Ellenton, North Port, Englewood, Palmetto, FL.

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Real Property Management of Sarasota & Manatee
of Sarasota & Manatee

Office: 941-225-8183

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"Sarasota & Manatee County, FL Zip Code Market Area - Short Sales, preForeclosure 34201, 34202, 34203, 34204, 34205, 34206, 34207, 34208, 34209, 34210, 34211, 34212, 34215, 34216, 34217, 34218, 34219, 34220, 34221, 34222, 34228, 34243, 34250, 34251, 34260, 34264, 34270, 34281, 34282, 34229, 34230, 34231, 34232, 34233, 34234, 34235, 34236, 34237, 34238, 34239, 34240, 34241, 34242, 34272, 34274, 34275, 34276, 34277, 34278, 34293, 33834, 34251, 34284, 34285, 34223, 34224, 34284, 34285, 34286, 34287, 34288, 34289, 34290, 34291, 34292, 34293, 34295

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Topic:
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Groups:
Property Managers Network
National Association of Residential Property Managers (NARPMĀ®)
Rental Agents and The Single Family Rental Market
FLORIDA PROPERTY MANAGERS
Tags:
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Rainmaker
204,825
Sandy Williams
eXp Realty, sandy@sandywilliams.com - Sarasota, FL

Lets hope they continue the relief act.

Nov 26, 2012 04:56 AM #1
Rainmaker
785,955
Nancy Frimann
Eagle Ridge Realty/Signature Homes & Estates - Gilroy, CA
California Real Estate Broker

Key point is their Principal Residence.  I don't know if too many people know that and they are in for a huge surprise...  Might've been cheaper to hang onto the property.

Nov 26, 2012 04:56 AM #2
Rainer
366,437
John Michailidis
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

@ Sandy: Ahmen sister! I wish they would step aside and just let us THRIVE!

Nov 26, 2012 10:39 AM #3
Rainer
366,437
John Michailidis
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

@ Nancy: Good point! Thank you for sharing your comment with us!

Nov 26, 2012 10:40 AM #4
Rainer
364,139
Dwight Puntigan
DRP Realty, LLC - Saint Peters, MO
Dwight Puntigan

There are not many short sale sellers that will be able to pay the IRS for the tax due.  Even with payments to the IRS the tax could bury them for years.  If the seller is insolvent they may avoid the tax, credit wise they could be losers.  Is that true???????

Dec 03, 2012 11:46 PM #5
Rainer
366,437
John Michailidis
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

@ Dwight: Why you act as if the IRS doesn't have a right to extort every last penny from a dead corpse . . . ;-)

Dec 04, 2012 03:16 AM #6
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Rainer
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John Michailidis

Real Property Management of Sarasota & M
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