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Submitted By: HC
Answered: February 4, 2014 8:30 am
Answered: February 4, 2014 8:30 am
I am underwater with my home mortgage and I’m working on closing a short sale. Does the tax-free treatment of debt forgiveness rule apply in 2014?
The favorable rule allowing debt forgiveness on a principal residence mortgage up to $2 million expired at the end of 2013. It could be extended, but given the resurgence in the housing market, it may not be included in a package of extenders this year. Stay tuned!
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Tax Glossary
Exemption
A fixed deduction allowed to every taxpayer, except those who may be claimed as a dependent by another person. Extra exemption deductions are allowed for a spouse on a joint return and for each qualifying dependent. A deduction of $3,400 is allowed for each exemption claimed on 2007 returns, but the deduction is phased out for certain high income individuals.
