January 11, 2008
Mortgage Forgiveness Debt Relief Act of 2007
President Bush signed this into law on December 20, 2007. The text can be found here. It applies to "discharges of indebtedness on or after January 1, 2007" and before December 31, 2010. It applies to the discharge of "qualified principal residence indebtedness" which means "acquisition indebtedness" "with respect to the principal residence" up to $2 million. The discharge does not result in income. It will however reduce the taxpayer's basis on the home.
For whatever its worth, the "Mortgage Forgiveness Debt Relief Act of 2007" also deals with benefits to firefighters, cooperative housing corporations, low-income housing credits, partnership returns and S Corporation returns.
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