In 2007, the Federal Government passed The Mortgage Debt Forgiveness Relief Act as a means of enabling upside down property owners to possibly avoid paying income tax on unpaid loan debt after a foreclosure, short sale, or even a loan modification. The Act was passed in response to the collapsing real estate market as we […]
Whenever a borrower fails to pay back a loan in full and the lender chooses not to sue the borrower for the deficiency, the result is that debt has been forgiven. The IRS considers such forgiven debt to be income received by the borrower, technically called “Cancellation of Debt Income”, and the borrower must pay […]
After the Real Estate market began crashing in late 2006, people who lost their homes to foreclosure or short sale or even those who got a loan modification .received a nasty surprise. Their lenders sent them a 1099 Tax form identifying how much of the debt had not been repaid, ie: forgiven. The IRS and […]
Originally Posted 12/8/14 Homeowners who went through foreclosures or short sales during calendar year 2014 may be getting a holiday gift from Congress this year. Many of you are aware that the Mortgage Debt Forgiveness Act (MDFA) expired federally and in California on December 31, 2013. Because of the expiration, individuals foreclosed on or who […]
News has been flying around the Internet based upon a recent IRS letter released by Senator Barbara Boxer and the California Assn. of Realtors stating that they would not be taxing debt forgiveness on short sales. Today, we’ll look at that news and the rationale behind it. Debt Forgiveness occurs whenever a property is transferred […]
