Kingcade & Garcia, P.A.
Set Up a FREE In-Office Consultation
305-285-9100
Open Every Saturday Morning 8 AM to 11 AM.

Forgiven mortgage debt: Is that considered taxable income?

For many homeowners across the country -- and certainly in Florida -- a perfect storm of adverse factors have conspired over the past handful-plus of years to render their ownership problematic and drive them ever deeper into serious debt.

One such factor is the simple economic difficulty wrought by the so-called Great Recession, which has made monthly home payments a tremendous burden for high numbers of mortgagees. Millions of people have lost their jobs or become underemployed, and that has made timely mortgage payments an insuperable proposition for many of them.

Coupled with that development is the falling value of home prices in many locales nationally. Florida is routinely noted as a state with an especially outsized problem regarding plummeting home values; one recent media article discussing negative equity and mortgage debt notes that nearly half of all the homes in Miami are worth less than the amount that is owed upon them.

Many homeowners have sold their homes at a loss in recent years, only to discover subsequently this unpleasant fact: The IRS deems any amount of money owed that is written off by a lender as taxable income to the mortgagee.

Congress has stepped in, as the above-cited article notes, "to ease the burden on troubled owners with negative equity" by forgiving mortgage debt that exists in such situations.

There is a caveat to that debt-forgiveness program, though: It expired at the end of 2014. Unless it is extended, owners who modify loans or sell their homes in 2015 will lack legal protections against tax levies next year.

A bipartisan bill that does seek to extend the debt-relief period has in fact been recently introduced in Congress. Given the depressing numbers reported by researchers applicable to underwater mortgages and negative equity that persist in areas across the country, an extension is sorely needed.

No Comments

Leave a comment
Comment Information

Set Up A Free, In-Office Consultation

Open Every Saturday Morning 8 AM to 11 AM.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

EMAIL US FOR A RESPONSE

Firm Location

Kingcade Garcia McMaken
1370 CORAL WAY
Miami, FL 33145

Miami Law Office

Firm Number
Review Us