Foreclosure? claim the mortgage tax forgiveness on your 2007 tax return!

By
Real Estate Agent with One Realty Group Edge - The Sanders Team 279103

Facing Foreclosure? You May be Eligible for Tax Relief
(ARA) – When your home is losing value and your family is facing the financial stress of foreclosure, the last thing you need is to be hit with an enormous tax bill. The Mortgage Forgiveness Debt Relief Act of 2007 helps protect Americans facing foreclosure from higher taxes while they attempt to refinance a home mortgage.

This temporary act creates a three-year window for some homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. This means if the value of your home drops and your bank or lender forgives a portion of your mortgage, the federal government won’t treat that amount as taxable income. This exclusion only applies to discharges made after 2006 and before 2010. Additionally, the basis of the principal residence must be reduced (but not below zero) by the amount excluded from gross income.

“To claim mortgage tax forgiveness on your 2007 tax return, taxpayers need to complete IRS Form 982 – Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment),” says Stephanie Behrends of 2nd Story Software, makers of the popular TaxACT tax preparation software and online services. However, because it wasn’t until late December that lawmakers signed this legislation into law, the IRS only just started accepting the Form via e-file on March 3.

“TaxACT Standard, our completely free tax preparation program that prepares federal income tax returns, and our premium TaxACT Deluxe software edition both include Form 982 as part of the software package,” she adds. Because not all taxpayers whose homes have been foreclosed are eligible to claim mortgage tax forgiveness, it may be necessary to consult a tax professional or attorney prior to submitting Form 982 to the IRS.

More information regarding The Mortgage Forgiveness Debt Relief Act of 2007 can be found at www.IRS.gov. Use key word “Form 982.” Information regarding TaxACT can be found by visiting www.TaxACT.com.
Courtesy of ARAcontent

If you are facing foreclosure contact me to learn about all of your options. Call today before it's too late, I can work with your lender to usually postpone foreclosure.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Location:
Georgia
Tags:
foreclosure
mortgage tax forgiveness act

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
336,210
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC
Great to know
Apr 06, 2008 11:29 AM #1
Rainmaker
777,768
Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

Hi Lorrie,

Good info, thanks for sharing.  Have a great evening.  Michael A. Caruso

Apr 06, 2008 11:29 AM #2
Rainmaker
600,951
Aaron Norris, MBA, APR
The Norris Group Hard Money Lending - Riverside, CA
Hard money lending and real estate investments.
Thanks for the note.  I know this has been passed nationally but does every state have to sign off on it.  I thought I heard it was off to assembly in California last week.
Apr 06, 2008 11:43 AM #3
Rainmaker
32,546
Lorrie Ann Thomas
One Realty Group Edge - The Sanders Team - Woodstock, GA

In response to Aaron Norris, I don't know if every state has to sign off on it or not. If it is approved nationally then no matter what state you are in you should be able to claim it. But that would be a good question for a tax professional.

Apr 06, 2008 11:47 AM #4
Rainmaker
1,064,457
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate
This is one of the better stimulus packages the government has created. It would not make sense to be penalizing someone when they are down and out from taking a financial blow.
Apr 10, 2008 12:16 AM #5
Anonymous
Anna, Kingston, NY
Great info. My question is do you have to be in foreclosure?  If you owe more then 10,000.00 in taxes and this tax issue is going to effect your payments to your mortgage company can you get assistance now so that you are not put into foreclosure?   
Apr 15, 2008 02:18 AM #6
Rainmaker
32,546
Lorrie Ann Thomas
One Realty Group Edge - The Sanders Team - Woodstock, GA

Good point Anna.  That would be a good question to ask a tax professional. Please keep us updated as to what advice your tax professional gives you regarding that. It would be interesting to know. 

Another angle on that question would be whether or not your lender would be willing to modify your mortgage loan and work with you to get your payments down to something more affordable due to the change in circumstances and the amount of monthly payments to the IRS.  just another possibility to consider.

 

Apr 15, 2008 02:29 AM #7
Rainmaker
3,055,815
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

People who are solvent but upside down need to consider what they will do if they MUST SELL after the tax break expires at the end of 2012, but BEFORE their property is at break even again.

Jul 11, 2010 01:19 PM #8
Post a Comment
Spam prevention
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
32,546

Lorrie Ann Thomas

Ask me a question
*
*
*
*
Spam prevention

Additional Information