bulletHomebulletAttorney Profile & AwardsbulletRecommendationsbulletEstate Attorney ServicesbulletBusiness Attorney ServicesbulletTax Attorney ServicesbulletLegal Guides Written By Steven J FrommbulletTax NewslettersbulletLinks & FeedsbulletContact Us 215-735-2336
menu
Mortgage Debt Discharge of Primary Residencepage item

Email Me LinkedIn Facebook WordPress Twitter RSS Feed

Mortgage Debt Discharge of Indebtness Income

Overview of Tax Implications of Discharge of Mortgage

Overview

If a lender cancels or forgives money you owe, you usually have to pay tax on that amount. But when it comes to your home, an important exception to this rule may apply in 2013.

If the cancelled debt was a mortgage loan on your main home, you may be able to exclude the cancelled amount from your income. To qualify you must have used the loan to buy, build or substantially improve your main home.

The loan must also be secured by your main home.

If your lender cancelled part of your mortgage through a loan modification, or ‘workout,’ you may be able to exclude that amount from your income. You may also be able to exclude debt discharged as part of the Home Affordable Modification Program. The exclusion may also apply to the amount of debt cancelled in a foreclosure.

Joint Returns Exclusion is $2 Million

The Mortgage Debt Relief Act excludes from taxation discharges of up to $2 million of indebtedness that is secured by a principal residence and was incurred to acquire, build or make substantial improvements to the taxpayer's principal residence.

While the determination of a taxpayer's principal residence is to be based on consideration of "all the facts and circumstances," it is generally the one in which the taxpayer lives most of the time. Therefore, vacation homes and second homes are generally excluded.

Married Filing Separately Exclusion is $1 Million

HomemenuAttorney Profile & AwardsmenuRecommendationsmenuEstate Attorney ServicesmenuBusiness Attorney ServicesmenuTax Attorney ServicesmenuLegal Guides Written By Steven J FrommmenuTax NewslettersmenuLinks & FeedsmenuContact Us 215-735-2336
Loading
Search
Probate, Wills, Trusts, Estates, Business Attorney
Philadelphia Business & Estate Planning Attorney
Money for Lunch
Wills, Trusts Articles As Featured On EzineArticles
Philadelphia Business and Corporate Attorney
Loading
Search
Probate, Wills, Trusts, Estates, Business Attorney
Philadelphia Business & Estate Planning Attorney
Philadelphia Business & Estate Planning Attorney
Tax, Corporate, Business Attorney Martindale Hubbell AV Preeminent Award 2011
Wills, Trusts, Estate Planning Attorney AV Preeminent Peer Review Award 2010
Money for Lunch
Philadelphia Business and Corporate Attorney
Business Network Pennsylvania. Yellow Pages: directory and catalog for your company, products and services.
Wills, Trusts Articles As Featured On EzineArticles
Philadelphia Business and Corporate Attorney