Mortgage Debt Forgiveness

Saving money is always a big plus, right? Right. It doesn’t matter who you are, saving money is always great! Here is some great info on mortgage debt forgiveness, which may save you a bundle!

If your mortgage debt was/will be partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income.
10 facts the IRS wants you to know about Mortgage Debt Forgiveness

 

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

6. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.

9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading them from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

If you are facing what seems to be an imminent foreclosure in the following months, you should call Paige Slyman today at (770)-757-7671. He specializes in short sales, which is exactly what we’re talking about.  He can, and will help you escape from foreclosure.

Read more

Let’s save some $ on taxes, shall we?

It’s tax time again and everyone has an added load of stress on their shoulders. With the economy the way it is today you need to be sure you’re doing what you can to stay above the sea of debt that drowns so many people every year. We’ve found 5 tips that can tremendously help out homeowners during tax season, and we’re nice enough to share. 🙂

1. Deduct mortgage interest on your tax return. For most homeowners, mortgage bills are almost entirely interest. That sounds terrible doesn’t it? Darn right it does! The good thing about that is ALL of that interest is tax-deductible, up to a total of $1 million ($500,000 if you are married filing separately) on loans taken out to buy, build or substantially improve a primary residence. It gets better! ANY type of home is eligible. This includes mobile homes, houses, condos and even houseboats. 

2. Deduct Moving Expenses. If you move more than 50 miles from your current resident for work, you may be eligible to deduct quite a lot of things from your taxes. There are 3 criteria you must meet in order to be eligible for this tax credit. The first is that you must have found a new job within a year of your move. The second is simple; your employer cannot have helped cover your move. The third is that your new job must be 50 miles further away from your previous home than your old job was. The final requirement is you must work full-time for at least 39 weeks during the 12 months directly after the move. If you are self-employed, the final requirement is slightly different, you must work full-time for 78 weeks over the next 24 months. If you meet the criteria, you can deduct quite a few things. You can deduct the cost of gas and oil, plus the standard mileage rate of 20 cents per mile (if you keep all of your receipts). The cost of packing and moving your items from your old home to your new home is also deductible. Also, if you put things into storage you can deduct the cost of said storage for the first 30 days after the move.  The last deductible thing is the expenses for lodging the day your furniture is removed from your old house. If your family does not travel together, you can deduct expenses for one trip per person.

3. Request a property tax reassessment if your home’s market value has declined. If you bought your home within the last three or so years, it is likely that your current assessed property value is higher than the current market value of your home. This can make your taxes much higher than they should be. Fixing this isn’t much of a hassle and can be completed by going to your County Tax Assessor’s/Collector’s Office’s website. This link can walk you through it without you having to break your bank to have a consultant reassess your homes market value.

4. Damages to your home due to disasters is deductible. There are a lot of bad happenings in the world these days and bad things can happen to you and/or your home that you simply cannot avoid. These things can include the following: Car accidents in which you were ruled NOT at fault, storms and the aftermath (including hurricanes, tornadoes, flooding, etc.), fires (as long as the fire was not an act of arson), volcanic eruptions, vandalism, and even terroristic attacks on your home. In order to claim tax relief for any of these, you must provide proof of loss, prove that your property was damaged from such a disaster, and that you are the owner of the damaged assets. The IRS will need to know if you’ve filed an insurance claim, and whether you can expect your property to be fixed or not.

5. Deduct home improvements that increase your property value. Anything you do to improve your home, such as remodeling a bathroom or kitchen area or building/extending a deck is tax-deductible. One of the biggest parts of getting these expenses deducted is KEEPING YOUR RECEIPTS. If you expect the IRS to come check out your newly remodeled basement and give you credit for how it looks, you need to see a doctor. 🙂 However, if you change out a chandelier three times (and keep all of the receipts) because you keep finding new ones that you like more, you can only deduct the price of the one that currently hangs in your home.

We hope these tips shed some light on your ability to save some money this tax season. If you haven’t bought a home yet, but are still looking, be sure to give Paige Slyman at Slyman Real Estate GA a call at 770.757.7671

Happy house hunting! 🙂

P.S. Don’t forget to check out and Like/Follow us on Facebook, Twitter, and LinkedIn

Read more