I have spoken about this before and so far the Mortgage Forgiveness Act has not been extended. Will it? Most people believe it will, one Hill-watcher only puts the odds at 60-40, but if it is not, it will have major negative consequences for those folks short selling their homes. (As well as going through foreclosure!)
Now I am not an accountant or an attorney, and if you are facing these events I encourage you to seek the advice of competent professionals.
But my understanding is this, if you borrow money from a commercial lender and the lender later cancels or forgives the debt you may have to include that cancelled amount as income for tax purposes. You will receive a from the lender, and it will be reported to the IRS, the amount forgiven on a Form 1099-C, Cancellation of Debt.
The Mortgage Forgiveness Debt Relief Act allowed that amount to often be excluded from income on certain cancelled debt on your personal residence. It will expire the end of this year unless there is congressional action to extend.
So if you need to do it and have been putting it off, call me TODAY, time is nearly gone. 602-0055
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