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eddahopkins · Joined: 22 Dec 2008 Posts: 4 2.72 Dollars($)

Lets discuss for example:
If a debt cancellation in 2009 is $180,000, and $83,000 can be exempted under the liquidity exemption, then $97,000 is considered taxable canceled debt . At a 25% tax bracket, the taxable amount due to the IRS in 2009 around $21,000. How would the government expect Americans to pay the IRS while they are trying to save their homes. What are the options. It seems to me that the Home for Home ownership programs and Fannie Mae regulators did not consider the impact canceled debt on America,ns. Your comments please.

smithsussane · Posted: Tue Dec 23, 2008 11:08 pm Post subject:

Hi eddahopkins!

Welcome to forums!

Yes, taxes are charged on the canceled debt and a lot of people are facing problems in paying these taxes. In my opinion, the various programs that have been introduced recently are formed mainly to save the property from being foreclosed upon.

It has been estimated that around 400,000 homeowners will be able to avoid foreclosure through the HOPE for Homeowners Program over the next three years. This program will help a debtor to refinance the loan into a new 30-year or 40-year fixed-rate loan with lower payments. Thus, as the borrowers will get a new mortgage payment plan, then the chances of canceled debt also gets reduced I guess. If one thinks from that perspective, then I think this kind of programs are of big help to the borrowers.

Feel free to ask if you have further queries.

Sussane

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Options for Taxes on cancelled debt