Help with the IRS Mortgage Debt Relief

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Tuesday, September 8th, 2009 Subscribe To Our Feed

Since the economy has been struggling, the government has given us a rare opportunity to enjoy IRS mortgage debt relief. The IRS mortgage debt relief was designed by Congress to help homeowners who had gotten into trouble with their home loans and had to receive some sort of help from their mortgage company in the form of forgiveness or refinancing at a lower rate.

Previously, if a homeowner refinanced their home or saved money through forgiveness payments by the mortgage company, they still had to pay taxes on what the government saw as extra income. The amount was counted and put someone in a higher tax bracket, which would make them pay more money on their income tax return. Since the person that is requesting mortgage help is typically in financial trouble anyways, the government has since decided to give these people IRS mortgage debt relief instead.

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Why It Helps

Helping them when they need it most, this IRS mortgage debt relief program does not count the savings as income. The person does not move into a different tax bracket, but the savings must still be recorded on Form 982 to the government. One big exception to this is if the forgiveness was in relation to a second home or a second mortgage, meaning these would still count as extra income that year.

The IRS mortgage debt relief package is still available in 2008 and 2009. Since the economy is still struggling and many people are still having financial problems, the IRS mortgage debt relief act is most likely going to be extended or at least revised to help more people. It is important for individuals who do their own tax returns to be aware of this legislation so that they can receive the tax break. Look at your tax software program to see if the Form 982 is enclosed and can benefit you and your tax return.

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