The National Directory of Certified Public Accountants

Ask A CPA - Cancellation of Debt

Is My House Foreclosure A Taxable Event?

The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief. This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if (MFS).

If you need professional help with "Cancellation of Debt" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.