Discharge of Indebtedness Income

Mortgage Debt Relief Act of 2007 Expired January 1, 2014

11/26/14

Unless the Mortgage Debt Relief Act of 2007 is extended, distressed homeowner’s face the risk of the imposition of income taxes on the discharged mortgage debt upon a short sale, short refinance or foreclosure.

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Tax Consequences of Foreclosure or Short Sales of Certain Primary Residences

05/11/14

(305) 891-4055 - 25 Years of Experience,  Over 8,000 Cases Filed - Free Initial Consultation - Miami Bankruptcy Lawyer Jordan E.

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Exempt Property Not Excluded in Calculating Insolvency Exception

08/20/13

The case of Quartemont v. Commissioner, T.C. Summary Opinion 2007-19 (Jacobs, J.) illustrates the tax consequences of the settlement of debt at less than the full amount and specifically addresses the calculation of "insolvency" for the insolvency exception to the discharge of indebtedness income provision of the Internal Revenue Code. 26 U.S.C. 108. In this case, the taxpayers negotiated with their credit card companies to pay a lesser amount than what was owed instead of filing for bankruptcy relief.

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Tax Consequences of Foreclosure or Short Sales of Certain Primary Residences

06/02/12

In December, 2007, Congress passed the "Mortgage Forgiveness Debt Relief Act of 2007" to alleviate tax consequence for some homeowners in foreclosure. The new Act excludes from gross income certain cancelled discharged "qualified principal residence indebtedness."

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Mortgage Foreclosure and Discharge of Indebtedness Income

05/29/12

A mortgage foreclosure may also have federal income tax consequences. One issue is "discharge of indebtedness income." This can be understood as the IRS's attempt to tax you on money you were loaned but are not going to repay. The mortgage lender may be required to report the amount of the cancelled debt to you and the IRS on a Form 1099-C, Cancellation of Debt. Fortunately though there are various exceptions to this rule and even a recently added exception.

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