Tip 49-2011: Debt Forgiveness Act

<!–[if pub]> 281 7772400 10058400 259 261 257 276 262 279 1 0“““““““““““ 5 1 0 285 282 1 False 0 0 0 0 -1 304800 243 True 128 77 255 3175 3175 70 True True True True True 278 134217728 1 1 -9999996.000000 -9999996.000000 8 0 65312 0 5000268 0 280167156 65312 0 14869218 0 270336756 65312 0 14408667 0 270795508 65312 0 13421772 0 271778548 65312 0 2500134 0 282657524 65312 0 6710886 0 278463220 65312 0 16777215 0 268436212 65312 0 -1 (Custom) <![endif]–><!–[if pub]> 22860000 22860000 (`@““““` 266 263 5 110185200 110185200 <![endif]–>

(Debt Forgiveness Act)   
Most of the federal attempts (HAMP, HAFA, HARP, etc) to deal with the country’s serious real estate problems have been dismal failures.  One of the only winners, however, has been the “Debt Forgiveness Act.”  This act will continue to be effective through December 31, 2012.
Normally any “debt forgiveness” is taxable as ordinary income.  Accordingly, if there is a foreclosure and the property is sold at less than the outstanding debt, then this creates a deficiency which usually becomes taxable income.  Likewise, with a short sale, the deficiency created by the short sale is again usually taxable as debt forgiveness.  The lender will usually issue a 1099 for the amount charged off.
Under the Debt Forgiveness Act, as long as the property being sold or foreclosed was the residence of the Borrower then the Act applies.  Also the debt being forgiven has to be either purchase money, refinance of the purchase money debt or money borrowed to improve the residence.  Assuming the debt being forgiven meets these conditions, then there will be no taxable income to the Borrower who has just lost or short sold his house.
PS—Even if the debt being forgiven from a foreclosure or short sale does not qualify as a residence, there are still some exceptions which may result in no taxable income to the Borrower.  Please suggest that the Borrower check with their CPA or tax professional.
William D. Tucker, III, Sr. Partner
Tucker Griffin Barnes P.C.
          
Where Deep Insight Equals Powerful Advantage!
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636
Advertisements

About Charlotteville Personal Injury Attorney

Personal Injury attorney helping people injured in automobile, truck or mortorcycle accidents.
This entry was posted in Uncategorized and tagged . Bookmark the permalink.

2 Responses to Tip 49-2011: Debt Forgiveness Act

  1. Patrick says:

    Powell River Mortgage Broker is in Real Estate industry since 1994 as a successful Realtor. They provide the best consultancy services and Real Estate Tips to the clients since 2001.

  2. When we want to invest in real estate that time we must take a advice for the agents.It gives the real guidance about that properties.The best consultancy services provide many different facilities. Garages

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s