IRS offers pointers regarding mortgage debt forgiveness by Jeff Brooks CPA

This is is a MUST read if you are concerned regarding mortgage debt forgiveness on forms 1099C and 1099A.

1099A and 1099C are forms that have different treatment!

IRS has published information on 10 key points regarding mortgage debt forgiveness. While canceled debt is normally taxable, there is one exception available to homeowners whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, according to IRS. Among the key points enumerated are the following – under the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer may be able to exclude up to $2 million of debt forgiven on his or her principal residence; the limit is $1 million for a married person filing a separate return; a taxpayer 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 a principal residence and be secured by that residence; and refinanced debt proceeds used for the purpose of substantially improving a principal residence also qualify for the exclusion. IRS Tax Tip 2012-39 can be found on the IRS website at http://www.irs.gov/newsroom/article/0,,id=254930,00.html

 

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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