By George Weinstein, Esq., Buckingham, Doolittle & Burroughs, LLP
Taxpayers may now exclude up to $2 million of qualified mortgage debt forgiveness on their principal residence without being subject to federal income tax. The Mortgage Relief Act applies to acquisition indebtedness discharged in the years 2007, 2008, and 2009.
Acquisition indebtedness is indebtedness incurred in the acquisition, construction or substantial improvement of a principal residence and secured by the residence. The basis of the principal residence is reduced by the excluded amount but not below zero. Taxpayers may obtain these benefits by filing IRS Form 982.