Tax Laws
references about the impact debt foregiveness on short sales and foreclosures
With the words of the IRS:
“The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.”
You can see the details including filing procedures at the link: http://www.irs.gov/individuals/article/0,,id=179414,00.html
Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.
Mortgage Forgiveness Debt Relief Act 2007
Article form John F.K. McGill Austin Real Estate Attorney | Hancock & McGill L.L.P |
