Are Tax Abatements on Principal Reductions Gone for Good?
By Oppenheim Law on Deficiency Judgments, Florida Law, Foreclosure, Real Estate & Roy Oppenheim
Hi, Roy Oppenheim here from the trenches 2017. Happy New Year, I hope you like my new glasses. I want to talk a little bit about loan forgiveness income as it relates to an abatement that was occurring since 2008 when President Bush was leaving office and all through the Obama administration. And that is that if you had principal that was being reduced either in a foreclosure because you got a waiver of deficiency, or in a short sale where the deficiency was waived, or even a mortgage modification, that loan forgiveness income which normally used to be taxed, was not taxed since…from 2008 up through 2016. Well, the news is 2017 looks right now that there will continue to be taxes having to be paid, so there is no current abatement for 2017. Have no idea what the new administration is gonna do, no idea what the new Congress is gonna do, but for the time being, 2017, if in fact you do a short sale, or a loan modification, or have a deficiency in a foreclosure and they’re all waived, you may be looking at a very large tax liability. Hopefully Congress will once again renew the extension. There’re no guarantees, no promises, but right now there is no abatement of the loan forgiveness income that the IRS will charge you under those circumstances. Roy Oppenheim from the trenches. Have a great year.