Mortgage Forgiveness Tax Exemption ends December 31

The tax exemption for mortgage forgiveness ends December 31. This exemption removed any taxes on money that a bank forgives after a foreclosure, deed-in-lieu of foreclosure or a short sale. A bankruptcy also removes these taxes if the bankruptcy is filed prior to the taxes becoming due on your tax return. Another way to avoid this tax is to show the IRS that you are insolvent. (IRS Form 982 or Publication 4681).

Congress may renew this exemption but who knows between now and the end of the year if they are going to get any work done.

If you do not fit with in either of these exemption the IRS will consider the forgiven debt to be income and the debtor will owe income tax on that amount of money.

If you have any questions contact the

Law Offices of Gregg W. Wagman at:
70 Howard Street Suite C
New London, CT 06320

Serving the Eastern Connecticut region including the Northeastern towns of Thompson, Putnam,
Brooklyn, Colchester, Willimantic, Marlborough, Lebanon and Plainfield and the Southeastern towns of Old Saybrook, Old Lyme,East Lyme,Waterford, New London, Groton, Salem, Ledyard, Montville, Mystic, Norwich, Voluntown, Preston, Stonington, North Stonington and New London

Want to Leave a Reply?