Mortgage Forgiveness Debt Relief Act of 2007
Mortgage Forgiveness Debt Relief Act of 2007
Prior to the passage of this law, for any debt that was forgiven in a short sale or foreclosure, the homeowner would receive a 1099 and would have to report this forgiveness or cancelled debt to the IRS as income.
The law was passed on December 20th 2007 which eliminates the phantom tax on debt cancellation in mortgage discharge from January 1st 2007 to January 1st 2011 as long as the debt was incurred on a principal residence. (So this doesn't apply to investors)
A couple key things to note about this. Debt for a second mortgage or HELOC (Home Equity Line of Credit) is not eligible. Debt for a second home or investment properties is not eligible. Up to $2,000,000 is eligible on the principal residence.
Rob Alley, Realtor at Keller Williams Charlottesville
Certified Short Sale Specialist in Virginia
Certified REO Property Specialist
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
http://www.theaverygroup.com/
Prior to the passage of this law, for any debt that was forgiven in a short sale or foreclosure, the homeowner would receive a 1099 and would have to report this forgiveness or cancelled debt to the IRS as income.
The law was passed on December 20th 2007 which eliminates the phantom tax on debt cancellation in mortgage discharge from January 1st 2007 to January 1st 2011 as long as the debt was incurred on a principal residence. (So this doesn't apply to investors)
A couple key things to note about this. Debt for a second mortgage or HELOC (Home Equity Line of Credit) is not eligible. Debt for a second home or investment properties is not eligible. Up to $2,000,000 is eligible on the principal residence.
Rob Alley, Realtor at Keller Williams Charlottesville
Certified Short Sale Specialist in Virginia
Certified REO Property Specialist
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
http://www.theaverygroup.com/
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