Debt Relief Act of 2007

Today President Bush signed into law a new measure giving a tax break to homeowners who have mortgage debt. With the passage of the Mortgage Forgiveness Debt Relief Act, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence. Prior to the passing of this law, when the lender forgave debt through a short sale or refinance, the borrower was usually taxed for the discharged income. The tax break will apply to those debts discharged from January 1, 2007 to December 31, 2009.

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007