Legislation Ending Tax On Mortgage Debt Forgiveness Introduced In U.S. Senate

An article in The Enquirer (Cincinnati, Ohio) reports:

• "Two U.S. senators from two states hit hardest by the rising tide of foreclosures introduced legislation Tuesday to change current law that forces individuals to pay income tax when they have part of their mortgage loan forgiven or are forced to foreclose because of inability to pay their mortgage."

The Internal Revenue Service currently taxes any loan forgiveness as "income."

For more, see Senators: Tax must end (Call it unfair to those in foreclosure).

For a prior story about similar legislation introduced in the U.S. House of Representatives, see The Tax Man Will Care About Your Forgiven Debt.

Go here for other posts on avoiding income tax on "cancellation of debt" on short sales and mortgage foreclosures. short sale