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Your Debt Could be Forgiven?

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     On December 20, 2007, the Mortgage Forgiveness Act was enacted to exclude income gain or loss from mortgage modification and/or foreclosure of one’s primary residence.

    Normally, when there is debt forgiven by the lender on one’s primary residence it is reported as taxable income even if it is a loss.   This Act excludes cancelled debt for your primary residence.  Remember, this act is for one’s primary or principal residence only.

    This Act applies to debt forgiven for the years 2007, 2008,  and 2009.

ss_blog_claim=16bce617ae205fd30e351ce0f906d093The debt is still reported, but the homeowner would use Form 982.  The homeowner will receive Form 1099-C from the lender letting the homeowner know his or her debt was forgiven by the lender.  Armed with this document and under the provisions of Form 982, the homeowner may exclude the debt all together by providing proof of insolvency.

  Please consult your tax advisor and www.IRS.gov for more information.

Originally posted 2008-12-04 07:36:58. Republished by Blog Post Promoter

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Serena Brown is broker and owner of Taylor-Brown Real Estate. She is the author of this blog. She has also co-authored a book entitled Should I Short Sale My Home. She has authored a e-book How to Sell My Home. She will be authoring a book on real estate investing by April of 2010 and several reports. She has dual degrees in Business Administration and Electronic Engineering Technology. She prides herself on being up to date on all trends, news, and education related to real estate to include short sale, loan modification, etc. She also makes sure her clients are abreast of how these changes will affect them financial. Therefore, stay tuned for great information in 2010.
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