Mortgage Debt Relief Act of 2007
The Any debt which is forgiven, including mortgages is regarded as income by the IRS. The amount forgiven by the lender is then taxed just as any other income. The Mortgage Debt Relief Act of 2007 is designed to relieve the impact of canceled mortgage debt. Enacted in 2007 and subsequently extended into 2016, the act applies only to principal residences and will discharge a maximum of $2,000,000 of canceled debt. With few additional requirements the act applies to most homeowners going through mortgage restructuring, refinancing, a short sale or foreclosure. In addition to mortgages, the Mortgage Debt Relief Act applies to loans secured for significant improvements to a primary residence provided it is secured by that residence.