so many people question whether, if in a deficiency state whether the bank can collect the difference of one's lost to the balance of their mortgage. as more banks threaten to sue you or one for the difference, please note this act was put in place to protect YOU!!!!
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
"If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation:
What is Cancellation of Debt?
Is Cancellation of Debt income always taxable?
read on.....
-
tobee43 started a blog post The Mortgage Forgiveness Debt Relief Act and Debt CancellationThe Mortgage Forgiveness Debt Relief Act and Debt Cancellation
You must be logged in to post a comment.
if you surrendered it, prior to the 2012 date, you should be covered by the Act, as long as you surrendered in the bk prior to 2012 if it was listed in your bk. however, that amount of your relief (the amount of the sale to what you owe is what's included under thet Act), it doesn't have much to do with certain maintenance responsibility, unfortunately. many towns and cities and HOAs have ordinances requiring you to maintain the lawn and HOA dues, etc. up until the time the property does actually sell. you'd be best off to hire a lawn guy off of craigslist or some local paper than to deal, at a later date, with a possible law suit from the local town, city or HOA. those costs have nothing to do really with the Act. if you surrender your house prior to that time, and prove insolvency, which most likely would be indicated by you going bk, i think your defiencey if any would be included under the Act.
i would still run this all by your lawyer. because personally, if the bank refuses to follow the "rules" and do nothing with the house, just exactly how long is it one is suppose to be responsible?? we are lucky with the respect that we have no town, city or HOA ordinance requiring us to do anything. and, in our case the bank as been caring and maintaining the property well over 3 almost 4 years. best of luck! and again run it by your atty...especially, IF the bank is claiming they have NO intent of ever selling the property, and just like us, there hasn't even been any effort to sell it.
i would get it in writing that the bank has NO intention of ever selling, that way if you later on get sued i would fight it. but again ask your atty.