Pub. 525 - Retroactive extension from 2018 through 2020 of exclusion of debt discharged from principal residence indebtedness

 

The 2019 Pub. 525 (revised 1/24/2020) and the 2018 Pub. 525, on page 21, discusses canceled debt that is excluded from income.  The heading, Excluded debt, states: “Do not include a canceled debt in your gross income in the following situations.”  One item listed therein is, “The debt is qualified principal residence indebtedness…”  It further states, under Amount eligible for exclusion: “The exclusion applies only to debt discharged after 2006 and in most cases before 2018.”

The Further Consolidated Appropriations Act, 2020, Public Law 116-94, Division Q, Sec. 101 (enacted 12/20/2019) retroactively extended the exclusion for 3 years, from 2018 through 2020.  Accordingly, the statement above under Amount eligible for exclusion should read, “The exclusion applies only to debt discharged after 2006 and in most cases before 2021.”

The 2019 Pub. 525 is being reposted to reflect this change, but neither the 2018 nor the 2019 publication will be reprinted