imputed Income?

Foreclosures, Short Sales, Tax Foreclosures
1

Does anyone know of a user friendly website or otherwise that explains the proposal that either has or is going to be signed by the President regarding potential forgiveness of debt in a short sale?

I believe it is called imputed income

Thanks

2

http://www.whitehouse.gov/news/releases/2007/12/20071220-3.html

Here is the pertinent paragraph that summarizes the whole thing

The bill I sign today will help this effort by ensuring that refinancing a mortgage does not result in a higher tax bill. Under current law, if the value of your house declines and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as money that can be taxed. And of course, this makes a difficult situation even worse. When you’re worried about making your payments, higher taxes are the last thing you need to worry about. So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. And it’s a really good piece of legislation. The provision will increase the incentive for borrowers and lenders to work together to refinance loans – and it will allow American families to secure lower mortgage payments without facing higher taxes.

3

this is on a refi but what about a short sale?

4

It is called Mortgage Debt Cancellation Relief Public Law 110-142

http://www.realtor.org/subprime_lending.nsf/Pages/mort_cancellation

IMPORTANT POINTS:
Relief applies only to an individual’s principal residence.
The forgiven mortgage debt must have been secured by that residence.
No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement.
Eligible debt is what is called “acquisition indebtedness.” This is debt used to acquire, construct or rehabilitate a residence.
Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt. (Same rule as Mortgage Interest Deduction)
Home equity debt (or second mortgages) qualifies if the funds were used to improve the home. (Borrower must have adequate records, as under current law.)

5

I really appreciate everyone’s valuable contributions