[Greatday]

Tax relief granted for forgiven debt, private mortgage insurance

Bush administration allows three-year window

Friday, December 21, 2007

By Matt Carter
Inman NewsPresident Bush signed into law Thursday a bill creating a temporary tax break for homeowners who are able to persuade lenders to forgive part of their debt, and extends a tax deduction for some families with private mortgage insurance.
For the next three years, the IRS won't count as income debt forgiven by lenders when troubled borrowers negotiate short sales or workouts on their primary residence that involve forgiveness of part of their debt.
HR 3648, the Mortgage Forgiveness Debt Relief Act of 2007, also extends for three years a tax deduction allowing families earning $109,000 or less to deduct all or part their private mortgage insurance premiums from their taxable income -- which could save them an average of $350 a year.
In signing the bill, Bush said that not counting forgiven debt as income for tax purposes "will increase the incentive for borrowers and lenders to work together to refinance loans -- and it will allow American families to secure lower mortgage payments without facing higher taxes."

[Eric Young]

This hit the wires last night and I sent it out to my short sellers, but does anyone know for certain if this also applies to those that actually were foreclosed upon?

I wasn't able to find a source that addressed people in that situation and was just too tired to read the actual bill - holiday shopping is exhausting (and, oh, to have just a portion of what Hannah Montana's making this year!).

[Greatday]

Originally Posted by Eric Young

This hit the wires last night and I sent it out to my short sellers, but does anyone know for certain if this also applies to those that actually were foreclosed upon?

Yes - it is retroactive to Jan 1, 2007

[jfkIII]

hmmm...and this should solve all the foreclosure problems in LV? I don't think many banks and lenders are into debt forgiveness to begin with.