This is a question we get many times, especially during the economic downturn. The IRS is actually here to help the taxpayer and here is their ruling:
Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. Details are on Form 982 along with its instructions, available now at irs.gov.
This is great news during this down economy, otherwise, all this cancelled debt would be taxable.
Is Cancellation of Mortgage Debt taxable?
Filed Under: Tax Help | Uncategorized
Tags:
FREE
Consultation
No Obligation
“Thanks to Fresh Start, I am feeling more and more confident about finally getting caught up after all these years.”
“I will certainly refer anyone I come across who needs your services for sure.”
“I cannot thank you enough for handling my IRS issues. After dealing with another office who did nothing, you guys did everything that you promised. Thanks again, especially Steve Jacob for guiding me every step of the way.”