Mortgage Forgiveness Debt Relief Act of 2007

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Max Garcia(916)849-6259

Prepared by

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Brief

• House Bill H.R. 3648• Bill signed in to law on Dec 20, 2007• Amends the IRS Code of 1986• All local house member approved

except Wally Herger representing 2nd Dist. of CA including the cities of

Redding, Chico, and Yuba/Marysville area

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Main Provisions of Act

• Became effective Jan. 1, 2007• Runs through Dec. 31, 2009• Discharges qualified principal residenceprincipal residence

indebtedness from gross income.• Basis in home must be reduced by any debt

forgiven under this provision• Does not apply to discharge of services

performed by lender.

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• Assume a $300,000 loan balance outstanding.• $60,000 is equity debt• $100,000 of the loan is forgiven.• Only $40,000 ($100,000- $60,000) of the

forgiven loan is qualified for exclusion under the new law.

Example

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Misc. Tax Tips• Last day to pay

– Corporations and Partnerships is March 15th, – Personal returns is April 15th,

• Last day to file– Corporations and Partnerships is September 15th, with extension– Personal returns is October 15th with extension

• For 2007 forward, installment agreements will cost $105 or $52 if debited directly from your account.

• Failure to file or pay may increase your tax bill by 25% with an interest rate of 5% on all outstanding balance.

• With current storms causing much damage remember that any loss to home or property caused by natural disaster or theft can be deducted, less insurance repayment

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