Do you have “Mortgage Debt Forgiveness”? Have you received a 1099C?
If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiveness income.
Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.
Taxpayers may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
However, proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion.
Call Bob now at 215.943.3296 if you believe you qualify for this special exclusion and let our firm assist you with this relief.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax relief provision. In some cases, however, other tax relief provisions, (for example, insolvency), may be available. Call Bob now for more details.
If your debt is reduced or eliminated you will receive a year-end statement, Form 1099C, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
Bob urges borrowers to examine the receipt of any Form 1099C’s carefully. Notify the lender immediately if any of the information shown appears to be incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7). Call Bob now at 215.943.3296 for solutions to these issues.
Contact the accounting, tax and financial consulting firm of Robert C Olivieri, Jr. PC if you still have any other questions or are looking to have your personal, corporate, payroll or sales tax returns prepared. Take advantage of our 30 plus years of Accounting, Tax and Financial Consulting experience to reduce your IRS liabilities and show you our provocative Retirement Strategies.
Our retirement suggestions are not stockbroker friendly because we are not in the business of selling stocks or mutual funds. Feel free to call Bob, almost anytime, at 215.943.3296 for any questions you may have.
Is it not time you dealt with Accounting and Tax Professionals that are available at your convenience?
