Well the Mortgage Relief Act has been signed just before Christmas. What is good about this legislation is that those who have been hit with a a foreclosure or short sale now will have tax relief on the loss accrued by the lending company as opposed to it being considered taxable income.
US President George W. Bush has signed the Mortgage Forgiveness Debt Relief Act into law. The measure will waive taxes for many homeowners who must restructure their mortgages as they face foreclosure.
The US housing market has seen serious strains in recent months. Property values have fallen in many parts of the country. At the same time, the ongoing subprime lending crisis threatens middle-class homeowners, as many have seen their monthly payments increase faster than their ability to pay.
Jane Mercer, California Resident, said, “Many people are just one paycheck away from being on the street they are in trouble.” The new law principally erases the tax bill that many homeowners would face if a lender erased some debt to ease payments. Before the law, debt that was forgiven in a foreclosure or as part of a loan workout was classed as income. via CCTV International
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I don't see this as good. Other folks who are relieved of debt from credit cards, business loans, etc. will still have to pay income tax on "phantom" income or debt forgiveness. Either you get rid of that provision altogether or everyone pays. It isn't equitable that one group of folks get preferential treatment.
This is a good thing. Some one who is foreclosed on has no liablity but some one trying to sell their home is charged for a phantom income.
I wonder how long its going to take. Maybe 2009.
Debt is the biggest issue facing us all.
I found this video on YouTube which really opened my eyes to the importance of getting out of debt: http://www.youtube.com/watch?v=50bWUrKAbwU
I am sure you will be as amazed as I was.