Mortgage Cancellation Law - Information Page from NAR

Mortgage Cancellation - Legislative History: “Mortgage Debt Cancellation Relief - H.R. 3648 - Public Law 110-142 General Information and Provisions

Individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.

General Provisions of Public Law 110-142:
No income limitation: All borrowers receive the relief, no matter what their income.
Dollar limitation: No more than $2 million of mortgage debt is eligible for the exclusion ($1 million of debt for a married filing separately return).
Relief applies only to an individual’s principal residence.
The forgiven mortgage debt must have been secured by that residence.
No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement.
Eligible debt is what is called ‘acquisition indebtedness.’ This is debt used to acquire, construct or rehabilitate a residence.
Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt. (Same rule as Mortgage Interest Deduction)
Home equity debt (or second mortgages) qualifies if the funds were used to improve the home. (Borrower must have adequate records, as under current law.)
See cash-outs, above. No amount of a cash out may be treated as acquisition debt.”

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This entry was posted on 11. January 2008 at 22:42 and is filed under National Real Estate Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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