January 21, 2008

New Tax Breaks a Relief for Homeowners

By Marcie Geffner - Bankrate

Homeowners found three attractive tax breaks among their holiday presents, thanks to the federal Mortgage Forgiveness Debt Relief Act of 2007, which was enacted in December.

The first tax break concerns forgiveness of debt, which occurs when a lender forgoes repayment of principal and/or interest the borrower owes. Typically, discharged debt is considered ordinary income to the borrower for income tax purposes. The new law allows taxpayers to exclude this amount and thus escape the tax liability.

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http://www.bankrate.com/brm/news/real-estate/20080110_mortgage_tax_relief_a1.asp?prodtype=mtg