Foreclosed? The IRS may want it’s cut.

For many who have recently gone through a foreclosure or short sale, the Mortgage Foregiveness Debt Relief Act passed by Congress assures that the IRS will not look to the homeowner for the shortfall that the lender was unable to recover after the property was sold. This Act is set to expire in 2012, so there is no assurance that the policy will be extended by the Government. Furthermore, as outlined in this CNN Money article, those who took home equity loans prior to the foreclosure or short sale are not able to benefit from this. The IRS will expect this debt foregiveness to be treated as income. Read more

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