December 17, 2017

2012 Sunset for the Mortgage Forgiveness Laws?

An important IRS provision for homeowners who need to restructure their mortgages or who are facing foreclosure might expire at the end of this month.

If you are considering restructuring your mortgage or are facing foreclosure

In the words of the IRS, “The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence.

Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.  This provision applies to debt forgiven in calendar years 2007 through 2012.”

An important debt-relief provision may expire 12/31/12

Most individuals’ largest debt is their mortgage, so this relief is vital, and is currently scheduled to sunset at the end of this year.  Will it be extended, or re-enacted?  Who knows, but it makes little sense to delay dealing with the mortgage on a principal residence if it’s an albatross around a homeowner’s neck.

To help homeowners negotiate the maze of issues related to foreclosure law, underwater mortgages, short sales and so on, I wrote this Primer on Bankruptcy for Distressed Homeowners.

Please remember, this is not intended as legal advice for your situation. Only a consultation with a qualified bankruptcy attorney is valid legal advice.