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Mortgage Debt Forgiveness & Short Sales (IRS)

December 21, 2011

THIS INFO WAS TAKEN DIRECTLY FROM THE IRS WEBSITE. IF YOU GO TO IRS.GOV & TYPE SHORT SALE IN THE SEARCH BOX, YOU’LL SEE IT THERE.

Its almost time to file taxes & I know so many people are affected by this so breathe a sigh of relief & read on….

Mortgage Debt Forgiveness (ASL) – YouTube video text script

Hi, I’m Patrick and I work for the IRS.

If your mortgage debt has been partly or entirely forgiven, you may be able to exclude the forgiven debt from your income.

Normally, the amount of debt forgiven by the lender must be reported on your tax return as income.

But because of a special tax relief program, generally, you will not have to report as income mortgage debt on your home that was forgiven or reduced by the lender.

This includes mortgage debt that was forgiven in foreclosure and debt reduced through a mortgage workout, short sale, or foreclosure.

This relief is only available on mortgage debt used to buy, build or improve your home.

And it is only available for debt that was forgiven in the years 2007 through 2012.

There is also a dollar limit on how much forgiven debt does not have to be reported.

See the instructions for Form 982 for more information, including information on restrictions that apply.

If you do qualify, just fill out Form 982 and attach it to your tax return.

A word of caution.

This relief applies only to mortgage debt.

Other kinds of debt are not eligible for this relief, and special rules and limitations apply.

So before you claim it, check out the details at http://www.IRS.gov

Page Last Reviewed or Updated: January 07, 2011

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