Mortgage Forgiveness Debt Relief Act of 2007

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http://www.irs.gov/irs/article/0,,id=179073,00.html
http://www.irs.gov/newsroom/article/0,,id=174034,00.html

“Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.”

In CA, most first home loans for purchase are non-recourse, but refis, HELOC, home equity loan are generally recourse which means that banks can come after you for up to 20 years.

Dec 2007 Law for foreclosures, short sales,

“The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.

The debt must have been used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.”

So, it appears that refi that are less than original mortgage or used to rebuild house qualify for debt forgiveness even though they may be recourse loans. Can anyone confirm my reading?

“Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.”

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Heres a good site from a CA CPA. Anyone who has questions on real estate taxes should read this. Would it be asking too much for Realtor to read this page and have a real basic understanding of these concepts? Yes, it would. You very well cant expect them to understand basic real estate tax law because you aren’t paying them $30,000 or more. Oh, wait you are paying them, but oh, never mind.

http://www.realestateinvestingtax.com/reifaq/index.html

http://realestateinvestingtax.com/shortsale.shtml

[equalizer]

Heres a good site from a CA CPA. Anyone who has questions on real estate taxes should read this. Would it be asking too much for Realtor to read this page and have a real basic understanding of these concepts? Yes, it would. You very well cant expect them to understand basic real estate tax law because you aren’t paying them $30,000 or more. Oh, wait you are paying them, but oh, never mind.

http://www.realestateinvestingtax.com/reifaq/index.html

http://realestateinvestingtax.com/shortsale.shtml

[equalizer]

Heres a good site from a CA CPA. Anyone who has questions on real estate taxes should read this. Would it be asking too much for Realtor to read this page and have a real basic understanding of these concepts? Yes, it would. You very well cant expect them to understand basic real estate tax law because you aren’t paying them $30,000 or more. Oh, wait you are paying them, but oh, never mind.

http://www.realestateinvestingtax.com/reifaq/index.html

http://realestateinvestingtax.com/shortsale.shtml

[equalizer]

Heres a good site from a CA CPA. Anyone who has questions on real estate taxes should read this. Would it be asking too much for Realtor to read this page and have a real basic understanding of these concepts? Yes, it would. You very well cant expect them to understand basic real estate tax law because you aren’t paying them $30,000 or more. Oh, wait you are paying them, but oh, never mind.

http://www.realestateinvestingtax.com/reifaq/index.html

http://realestateinvestingtax.com/shortsale.shtml

[equalizer]

Heres a good site from a CA CPA. Anyone who has questions on real estate taxes should read this. Would it be asking too much for Realtor to read this page and have a real basic understanding of these concepts? Yes, it would. You very well cant expect them to understand basic real estate tax law because you aren’t paying them $30,000 or more. Oh, wait you are paying them, but oh, never mind.

http://www.realestateinvestingtax.com/reifaq/index.html

http://realestateinvestingtax.com/shortsale.shtml

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