Mortgage Debt Forgiveness – The Final Year
The 2012 tax year is the final year of the Mortgage Debt Relief Forgiveness Act on the foreclosures and short sales of homes and the exclusion of the debt forgiven from being treated as income to the taxpayer. If your lender cancelled or had forgiven your mortgage debt, you generally would be required to pay tax on that amount being treated as income. 2012 is the final year in which you can exclude the tax consequence of this event, unless the act is extended by congress or the President, which is doubtful. If you meet the qualifications for this exclusion, ensure your tax preparer knows the circumstances and prepares the necessary forms to accompany your 2012 tax return.
For additional information, feel free to contact us at Tax Tiger, or visit the IRS.gov website and search for Mortgage Forgiveness Debt Relief Act, and/or Form 982.
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