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Debt Relief – Insolvency – Bankruptcy Information » Foreclosure Help, Insolvency, Mortgage Refinancing » Help from Mortgage Debt Relief Act 2010

Help from Mortgage Debt Relief Act 2010

Article by Ask Bill

Mortgage debt relief act 2010 or the Mortgage Forgiveness Debt Relief Act 2010 may be thought of as an extension of the Mortgage Forgiveness Debt Relief Act 2007 which would provide relief to taxpayers whose debts were forgiven from 2007 to 2012. This Act was passed so as to help home owners whose homes were sold or foreclosed when the home prices dropped. The result was that the homes were worth less than the principal of the mortgage. The resultant loss incurred due to foreclosure or short sell would be considered as forgiven debt which would in turn be treated as income and hence taxable. The debtor who was finding it extremely difficult to pay off his debt now was to take a double hit in terms of loss of home and liability to pay taxes on the cancelled debt on a home the debtor no longer owned.

Mortgage debt relief act 2010 would provide relief in case the forgiven mortgage was for the debtors primary home. Every cancellation of debt would require that the creditor issues a Form 1099-C in case the debt forgiven exceeds $ 600. Since the forgiven debt would automatically be considered as income by the IRS and would be taxable, it would be necessary for the debtor to report the same on Form 982 and attach it to the tax returns that the taxpayer would submit. However, it may help to note that all debts that might be cancelled due to reasons other than those pertaining directly to the financial condition of the taxpayer or to the actual decline in the value of the home would not be considered under the act and all such cancelled debt income would be liable for tax.

Mortgage debt measures might be available in the market these days as the realty sector faces crisis. The falling values of realty and lack of stability of employment might be the key factors that might be affecting the realty markets. It might be prudent to take appropriate action by looking to refinance one

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