Deadbeats to Stop Getting Free Ride
Mortgage deadbeats no longer get tax-free loan forgiveness
Economy • October 2012 • Views: 1,462
George W. Bush signed into law the “Deadbeat Specuvestor Act of 2007” which exempted forgiven mortgage debt from income tax.
Fortunately, it expires 1/1. The elimination of this would go a long way to closing our deficit, and making the 99% start to pay their fair share of taxes, too.
As it stands now, any mortgage debt forgiven by a lender in a short sale, loan modification or foreclosure is exempt from federal taxation. Come Jan. 1, that exemption expires.
Borrowers will have to count mortgage relief from lenders as income on their federal tax returns. That means, for example, a borrower would have to pay taxes on a $100,000 reduction in principal owed on a loan, or a $20,000 write-off in the amount owed after a short sale.
