Mortgage Debt Forgiveness - YouTube video text script
Here's a tip from the IRS.
Hi. I'm Theresa, and I work for the Internal Revenue Service.
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, in general, 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.
If you do qualify, just fill out Form 982 for more information, including information on restrictions that apply.
A word of caution though -- 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 on IRS.gov.