Still Underwater?

By
Real Estate Agent with Keller Williams Realty - Topsfield, MA 92593-B

Is tax relief in sight for those who find their mortgages still underwater? Could be. In light of the recent settlement between Bank of America and the U.S. Justice Department, which could bring principle reductions to homeowners currently living underwater. The question is: What will the tax implications if principle reductions happen?

Under current law any reductions are considered to be regular income to the homeowner and, thus, will be taxed as such. Depending on the size of the reduction the potential tax bill could be large.

It should be noted that the Obama Administration allowed Mortgage Forgiveness Debt Relief Act of 2007 to expired on December 31, 2013. Congress is currently considering to extend that act for reductions obtained in 2014.

Personally I think the $19B fine Bank of America has to pay should be directed straight to the fixing the debacle at Veterans Administration.

 

 

Posted by

I pray that God our Father and the Lord Jesus Christ will be kind to you and bless you with peace

2 Thessalonians 1:2

 

Doug Dawes REALTOR®, AWREP, LMC

Broker Sales Associate

KELLER WILLIAMS REALTY - Topsfield/Newburyport

49 Main Street
Topsfield, MA 01983
 978-887-3995  ~ Office
 978-270-3037  ~ Cell
 DougDawes@KW.com

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New Hampshire - Real Estate and Life in The Granite State!
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Ambassador
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Fred Griffin, on leave of absence from ActiveRain
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

     A reduced principal balance would be a blessing to millions of homeowners.  But if the Federal Government takes that blessing away through Taxation, then it is all for naught. 

     Ditto to putting that $19 Billion to good use at the VA Hospital - but spend it on doctors and nurses, not bureaucrats!   

Sep 16, 2014 01:13 AM #1
Rainmaker
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Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Great information, I really appreciate you sharing this with us!

Sep 16, 2014 02:20 AM #2
Rainmaker
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Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

@Brian - People need help during this long recovery. Glad you found the info useful

Sep 16, 2014 09:13 PM #3
Rainmaker
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Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

@Fred - I agree with you. "We're from the government and we're here to help you" LOL. I kinda got off track with the Bank of America thing. As a veteran, the VA thing has been of concern.

Sep 16, 2014 09:28 PM #4
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Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

The politicians and bankers weave their webs of deception and false promises, so far I have not met anyone with a reduced principle, though it would seem like an injustice to get this reduction and have it taken away with a tax bill that you can not afford to pay.

Oct 03, 2014 02:09 PM #5
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Doug Dawes

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