If you are one of the unfortunate homeowners who have or are considering a loan restructure, this is important information to you on tax benefits that expire this year.
In 2007 Congress enacted Section 108(a)(1)(E), which provides that a taxpayer who is neither insolvent nor in bankruptcy can still exclude up to $2,000,000 of cancellation of debt (COD) income related to the discharge (in whole or in part) of qualified principal residence indebtedness. This exclusion applies whether a taxpayer restructures his or her acquisition debt on a principal residence, loses his or her principal residence in a foreclosure, or sells a principal residence in a short sale.
This exclusion extension is set to expire on 12/31/2013.
Ask yourself…do you trust Congress to get another extension?