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Levitt & Slafkes, P.C. - Essex County Bankruptcy Attorneys

Get The Fresh Start You Deserve

Levitt & Slafkes, P.C. - Essex County Bankruptcy Attorneys
GET THE FRESH START YOU DESERVE

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and 13

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Loan
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Foreclosure

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Commercial and 
Bankruptcy
Litigation

State Federal &
Bankruptcy Court

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Bankruptcy & Debt Relief For
Individuals and Businesses

Chapters 7, 11 and 13

Find Out
More

Foreclosure Defense &
Mortgage Litigation

Saving Homes Fighting Banks

Find Out
More

Loan Modifications

Preventing Foreclosure

Find Out
More

Commercial and Bankruptcy
Litigation

State Federal &
Bankruptcy Court

Find Out
More

FORGIVENESS OF DEBT INCOME EXCLUSION RENEWED AND EXTENDED

| Mar 8, 2020 | Foreclosure Saving Your Home |

There is some good news for homeowners who have received and will receive debt forgiveness from their mortgage lenders in connection with mortgage modification, foreclosure or a short sale. The Qualified Principal Residence Indebtedness (“QPRI”) exclusion which terminated at the end of 2007 has been renewed retroactively to 2018 and 2019 and will remain in effect until January 1, 2021. The QPRI exclusion applies only to the homeowner’s principal residence, meaning their main home.

Absent the exclusion any principal amount of outstanding debt that is forgiven by a mortgage lender in connection with a loan modification, short sale, foreclosure or deed-in-lieu of foreclosure is deemed income to the borrower and is deemed income for tax purposes. Under the QPRI exclusion the amount of principal forgiven is not subject to taxation for federal tax purposes.

It is important to note that the QPRI exclusion only applies to amounts utilized to buy, build or substantially improve a home. The exclusion does not apply to amounts that a homeowner received by way of a cash out refinance. It is limited to $1 million for a single homeowner and $2 million for a married couple.

For those homeowners who reported income that would otherwise be subject to the QPRI exclusion in 2018, consult your tax professional regarding amending your return to take advantage of this recent change in the law. As for homeowners who have received Form 1099-C from mortgage lenders for debt forgiven in 2019, but now subject to the QPRI exclusion, you should also consult with your tax professional regarding the filing of IRS Form 982 with your return to exclude the income from your return.

Contact Us if You are Facing Foreclosure or Other Mortgage Loan Problems.
The contents of this article are not to be construed as legal or tax advice. We at the law firm of Levitt & Slafkes, P.C. are committed to providing timely information to our clients facing foreclosure or other problems related to their mortgage loans. If you are facing such difficulties, feel free to contact us today by calling (973) 323-2953, or contact us online.

We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information on this website and blogs is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.

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