Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. [/quote]
I’ve been wondering about this. So if my neighbor, who could never afford his house in the first place, gets a $200K gift from the bank, that is tax free? And 10 years from now, when he sells at a profit (and I sell at break-even), does he get the homeowner’s exemption on capital gains as well?
A decade from now there will be a class of people who realize a nice gain even though they made poor investment choices. You’ll know who they are, because they will be the ones buying the toys again…
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I think you’re reading too much into this. First the $200k “gift” most likely won’t materialize, and even if it does, in real dollars it’s not going to be worth *that* much in the future 🙂
Second, folks that got themselves into a big mess by ATMing their house to death are never gonna learn with this bailout, and eventually they’ll be back to square one in the future. You think these folks are going to suddenly wake up and say, “holy crap, I better be more frugal” and start saving?
They only way thee folks will ever learn is if they are thrown out onto the street and have to scrape by for a short period of time.Nope….Only next time there won’t be a bailout covering their asses. 🙂
Wealth generally isn’t built overnight by a 1 event lucky shot. And these clowns end up spending $2 for every $1 they have access to.
