Mortgage Forgiveness Debt Relief

[Annu Kumar]

H.R. 3648 or the "mortgage forgiveness debt relief act of 2007" Signed into law by President bush last December 20 at the white house. The new law erases the tax bill that many homeowners will face if their lender forgave their debt in order to ease their burdensome home laon payments. now you dont have to worry about Uncle sam Knocking on your door

 

[stick]

bush can pass all the bills he wants and the mortage companys will still take youre home if you default

 

[wesman]

If you can't afford the home, you can't afford the taxes.....I think it's just postponing the inevitable. I don't feel sorry for those that got locked into the teaser rates.....most of them were trying to make a buck and got f'd....you reap what you sew...bail yourself out, don't rely on me or the govt.

--wes

 

[TNVIPER]

The "relief" Annu has posted is for taxes....most do not realize but when a debtor defaults on a loan (credit card, mortgage, etc) the creditor is required to issue a form 1099. This reports the default to the IRS who treats the amount of the loan defaulted as income....there are currently exceptions if you use a competent tax preparer.......I have dealt with this many times as this is what I do..as a CPA...................Basically, the relief here is you meet the exception if you had one of the "trick" adjustible mortgages...

 

[Wifey]

Thanks for saving me the time of trying to clarify this :rock: :rock: :rock:

and thanks Annu for sharing

 

[joemags54]

The "relief" Annu has posted is for taxes....most do not realize but when a debtor defaults on a loan (credit card, mortgage, etc) the creditor is required to issue a form 1099. This reports the default to the IRS who treats the amount of the loan defaulted as income....there are currently exceptions if you use a competent tax preparer.......I have dealt with this many times as this is what I do..as a CPA...................Basically, the relief here is you meet the exception if you had one of the "trick" adjustible mortgages...

Great info TNVIPER!! In extreme cases, when all methods of collection have been exhausted, our accountant advises to send a 1099 for the balance of the debt owed to our supply company. (We have not had to do this, but, it's the same idea.)

 

[wesman]

The "relief" Annu has posted is for taxes....most do not realize but when a debtor defaults on a loan (credit card, mortgage, etc) the creditor is required to issue a form 1099. This reports the default to the IRS who treats the amount of the loan defaulted as income....there are currently exceptions if you use a competent tax preparer.......I have dealt with this many times as this is what I do..as a CPA...................Basically, the relief here is you meet the exception if you had one of the "trick" adjustible mortgages...

That's cool.....although the "trick" mortgage thing doesn't seem quite accurate. I believe that the folks that got an ARM knew exactly what it was, if they didn't , they should have. It is after all the largest/most important purchase of their lives, perhaps a little education and research was in order?

--wes

 

[OCBob]

Well, this is really designed for people in the jam that I'm in (that is if there were any way in hell to sell this house, been on the market for almost a year, had one person look). Basically, the house is worth hundreds of thousands less than I owe. Due to things outside my control, I can no longer make the payments (and I don't have an ARM). If the house were to sell in a short sale, I wouldn't owe the bank a dime, but I would owe the feds somewhere around 50k or more for taxes on "income".

 

[FerrariTruck]

I was under the assumption that you are not taxed on the sale of only your first home? Cant remember where I read that

 

[Annu Kumar]

Than I am in deep shit

 

[OCBob]

I was under the assumption that you are not taxed on the sale of only your first home? Cant remember where I read that

Only if you then "reinvest" the money into another home, that's capital gains. This is income tax as the bank and gov consider any money you didn't repay as income. So if they take a 100k bath because of the decline of property values the gov taxes you on that 100k.

 

[TNVIPER]

Only if you then "reinvest" the money into another home, that's capital gains. This is income tax as the bank and gov consider any money you didn't repay as income. So if they take a 100k bath because of the decline of property values the gov taxes you on that 100k.

Beeeeeeeeeeeep...wrong....if you sale you primary residence after having lived in it for at least 2 out of 5 yrs the first $250K gain/profit ($500K on joint returns) is not taxable whether you buy another house or not........and you can repeat this tax free gain 2 yrs later if you bought another house and live there 2 yrs..........I normally get $150 per hr for tax consulting services but VTCOA members only pay $100 per hr...where should I address my bill?..:dontknow:

 

[Wifey]

Beeeeeeeeeeeep...wrong....if you sale you primary residence after having lived in it for at least 2 out of 5 yrs the first $250K gain/profit ($500K on joint returns) is not taxable whether you buy another house or not........and you can repeat this tax free gain 2 yrs later if you bought another house and live there 2 yrs..........I normally get $150 per hr for tax consulting services but VTCOA members only pay $100 per hr...where should I address my bill?..:dontknow:

Does that exemption apply on a short sale as well as an arms length transaction? :dontknow:

Send my bill to FSTJACK