by Ted A. Greene on February 3, 2016
The 2007 Mortgage Forgiveness Debt Relief Act has been extended through the end of 2016.
On December 18, 2015, President Obama signed a bill that extended the Mortgage Forgiveness Debt Relief Act through December 31, 2016. The extension also retroactively covers mortgage debt cancelled in 2015.
The Mortgage Forgiveness Debt Relief Act (MFDRA) prevents homeowners who went through a short sale from being taxed on the amount of their home mortgage debt that was forgiven. Believe it or not, but normally, debt that has been forgiven by a lender counts as taxable income.
Originally enacted in 2007, the Mortgage Forgiveness Debt Relief Act allows debt forgiveness of up to $2 million to NOT be considered taxable income if:
• The house has been used as the principal place of residence for two of the last five years.
• The debt has been used to buy, build, or make substantial improvements to the home.
•
Obviously, this is a huge relief to owners of distressed properties who are already facing financial burdens, and it eases many of the concerns they may have had about moving forward with a short sale.
There are other ways to avoid the debt such as insolvency or bankruptcy but you really need to talk to both a legal professional and a tax expert.
If you need help with your mortgage please contact Mr. Greene. He has been a leader in helping homeowners struggling with their mortgage and even has been suing the banks to force them to follow California law. He can be reached at (888) 442-2545 or send him an email at tgreene@tedgreenelaw.com