Loan Modification/Foreclosures in Maryland
What you need to know about Loan Modfications, Foreclosures and Bank Schemes in Maryland
If you are involved in a Loan Modification or possible Foreclosure, it is important that you watch our YouTube Videos on Loan Modifications.
Maryland and Feds Both Have Now Eliminated Tax on Debt Foregiveness for Short Sales
Maryland's Governor Martin O'Malley recently signed legislation banning taxation on the forgiveness of debt on short sales. This brings Marylands treatment of debt forgiveness into line with pre-existing Federal Tax Law.
The Federal Government's Mortgage Debt Relief Act of 2007 as described on the IRS's own website:
"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 IRS also states on it's web site that:
"The debt must have been used to buy, build or substantially improve the taxpayer's principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available."
Contact Mike Davis or Michelle Resnick at 410-224-0667 for further information regarding assistance with short sales.