Evans Nelson & Company CPAs is sharing their insights on the Mortgage Debt Forgiveness Act of 2007, which came under review towards the end of 2012.
(prHWY.com) January 16, 2013 - Reno, NV -- Reno, Nevada (January 9, 2013) - Evans Nelson & Company CPAs is sharing their insights on the Mortgage Debt Forgiveness Act of 2007, which came under review towards the end of 2012. An authority on
tax preparation in Reno, the firm explains what the law does and how it affects homeowners.
Many homeowners have an "upside down" mortgage, where the loan is greater than the value of the home. For example, a house might have a real estate value of $200,000 and yet, for it, a person has to pay $500,000 in mortgages to a bank, making for a difference of $300,000.
The individual in this situation may then consider whether to foreclose on the house, do a short sale, or still pay the balance owed. If the bank and the borrower work things out, the former may forgive the latter's debt by sending a 1099-C cancellation of debt form for the $300,000 difference. However, in certain circumstances, the Internal Revenue Service (IRS) might still consider the amount forgiven as taxable income.
The Mortgage Debt Forgiveness Act of 2007 addresses the abovementioned scenario by not requiring the individual to pay tax on that $300,000 amount. Originally having a 5-year sunset provision to cover debts up to 2012, the Act was recently modified by Congress so that its coverage will extend until December 31, 2013.
Given this, it becomes vital to consult a licensed and experienced specialist. A professional, such an accountant, can evaluate and discuss the drawbacks and benefits of selling, keeping, or foreclosing a home, as well as possibly using the extended Mortgage Debt Forgiveness Act.
Evans Nelson & Company is a
noted Reno CPA firms with the necessary know-how to resolve these situations. Visit
www.BestCPAReno.com or call 775-825-6008 for more information on their services.
About Evans Nelson & Company CPAs
Evans Nelson & Company CPAs addresses the accounting and tax needs of people in northern Nevada and small business owners on the West Coast. Their office is located at 50 Continental Drive in Reno. Contact the firm by emailing Tim@BestCPAReno.com today.
###