Relief for Discharged Mortgages

Here is the latest on “Relief for Discharged Mortgages”

If a taxpayer’s mortgage is discharged after 2006 and before 2010, the amount can be excluded from income. The forgiven debt must be on the PRIMARY home and NOT on a second home or investment property. The discharged mortgage must have been used to purchase, construct or improve the main home. Home equity loans and cash-out refinancing do not qualify, EXCEPT for the portion used to make home improvements.

Also, mortgage insurance premiums are deductible if you itemize deductions but only on policies issued after 2006.

This information was provided to me by my accountant Joseph Zejavac from Accounting Connections in response to a question I had asked him. I felt like it was information that would be useful as many are getting ready to file their tax returns. If you have had a discharged mortgage be sure to check with your tax professional to see if you may qualify for this “relief”.