Posted by: terryorealtor | January 22, 2008

Mortgage Debt Relief Act

Everyone was excited about the mortgage debt relief act but read on: it only applies to originating loans…There are several caveats…homeowners are still advised to seek legal advice from their attorney’s or CPA’s.

 This from Wendy Cutrufelli-

{The Mortgage Debt Relief Act will save some homeowners facing
short-sales or foreclosures from paying federal taxes on the “forgiven”
debt.   There are very specific requirements:

·        The mortgage is for the homeowners principal residence.  The
relief does not apply to any debt forgiveness for any vacation or
investment home.

·        Forgiveness is only for the “acquisition indebtedness” of the
principal residence.  Acquisition Indebtedness is defined as the debt
used to acquire, construct or rehabilitate the home. 

·        No relief is available for cash-out mortgages whether the
cash-out takes the form of a refinanced first mortgage, a second
mortgage, a home equity line of credit or a similar arrangement.

o   Exception:  If the cash-out was specifically used to improve the
home and the homeowner has adequate records to prove it.

Important note: This bill relieves these specific homeowner of their
federal tax liability but does NOT relieve the homeowner of their state
income tax liability. }

Wendy Cutrufelli, CMPS, CMP
Certified Mortgage Planner
Direct: 877-27Wendy
    (877-279-3639)
www.CAMortgagePlan.com

 For further information regarding short sales please check out www.ccshortsales.com

 

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