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Showing posts with label Income Tax. Show all posts
Showing posts with label Income Tax. Show all posts
Monday, March 30, 2020
Wednesday, December 30, 2015
The President has extended the Mortgage Forgiveness
Debt Relief Act through the end of 2016 by signing Congress’ Spending
Bill
into law. As a result, the amount of money from a mortgage loan that is forgiven
incident to a short sale, foreclosure or deed-in-lieu of foreclosure will not
be taxable as income.
In the last week of 2014, the extension was passed and
then applied to all transactions that occurred in 2014, retroactively. Homeowners
closed transactions assuming that they were paying income tax on the forgiven
debt. As a result, homeowners elected not to pursue a short sale or
deed-in-lieu when it turned out to be their best strategic option.
Now that the law proactively extends throughout 2016,
homeowners in financial distress can list their homes for short sale, or work
out a deed-in-lieu with their lender, without the fear of being hit with a
severe income tax bill.
Another important provision of the Spending Bill,
beyond the Mortgage Forgiveness Debt Relief Act extension, concerns mortgage
insurance premiums, which are required for mortgage loans that exceed 80% of
the purchase price of a home (and is required to be paid until the loan balance
goes below 80% of the purchase price). Pursuant to the new law, premium
payments can now be deducted from borrower’s income tax, in the same manner as
mortgage interest, through 2016. This will continue to encourage homeowners who
may not have the funds for a 20% deposit to still be able to purchase a home.
Friday, January 02, 2015
Terrific
news is here with a tax break for those who sold or lost their underwater homes
to foreclosure in 2014.
The MDFA previously expired on December 31, 2013.
The
Mortgage Forgiveness Debt Relief Act (MFDRA) was extended through 2014 by the Tax Increase
Prevention Act of 2014 on December 19, 2014.
Homeowners who were forgiven debt a/k/a “cancellation of debt income” (difference between the total amount of the mortgage still owed at closing and the sale price or fair market value of the property) resulting from a short sale, deed in lieu of foreclosure or foreclosure sale, will have the forgiven debt excluded from their taxable income for transactions completed through 12/31/2014.
Homeowners who were forgiven debt a/k/a “cancellation of debt income” (difference between the total amount of the mortgage still owed at closing and the sale price or fair market value of the property) resulting from a short sale, deed in lieu of foreclosure or foreclosure sale, will have the forgiven debt excluded from their taxable income for transactions completed through 12/31/2014.
The MDFA previously expired on December 31, 2013.
So, for
those who lost a home to foreclosure or a short sale in 2014, you will receive a
nice holiday tax break when you file your taxes in the new year.
