Mortgage Forgiveness Debt Relief Act 0f 2007

when a lender decides to forgive all or a portion of a borrower's debt and accept less, the forgiven amount is considered as income for the borrower and is liable to be taxed. This was a problem for borrowers facing foreclosure and did a short sale. Mortgage Forgiveness Debt Relief Act 0f 2007 was introduced in Congress on September 25, 2007, and became law on December 20, 2007.This act offered relief to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure. The act extends such relief for three years, applying to debts discharged in calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008, this tax relief was extended another three years, covering debts discharged through calendar year 2012.) This makes it easier to perform a short sale, it allows you and the bank to negotiate a better deal. I would still advise a borrower considering a short sale to consult with a tax accountant or CPA. There are provision to the bill and not everyone qualifies, for example rental properties are excluded from obtaining relief. Always consult with the appropriate professionals. www.jmsrealestate.net