The National Directory of Certified Public Accountants

Ask A CPA - Cancellation of Debt

Are There Tax Consequences To My Mortgage Restructuring?

If your lender agrees with a restructuring, workout that reduces the principal of your debt, the debt reduction is considered cancellation of debt and reportable as other income on Form 1040 line 21 and you may claim the principal residence exclusion.

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.