Mortgage Debt Forgiveness Act Extended

For those homeowners who had their mortgage debt cancelled by a lender as part of either a short sale, loan modification or foreclosure, the Mortgage Debt Forgiveness Act which had expired on December 31, 2013 has now been extended for the year 2014.  Thus, debts reduced through mortgage restructuring, short sales or foreclosure may be able to be excluded provided it was used to buy, build or substantially improve your principal residence and was secured by a mortgage on that residence. The exclusion does not apply to refinanced debt used for other purposes such as purchase of an automobile or paying other debts.  You should consult your tax professional for the filing of proper forms on your 2014 IRS form 1040.

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    James B. Harrison

    James Harrison practices in the firm’s Business Law Practice Area. He has represented and counseled hundreds of businesses and organizations, including start-ups and emerging growth companies in all aspects of business law, including mergers, acquisitions, sale or other equity events as well as strategy around operations, funding, and exit.

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