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Tax on Principal Forgiviness

Posted in Principal Reduction, taxes

Folks underwater holding their breath Keith Harney Thanks to Seattle Times  September 13, 2014 It appears Congress will extend a tax-relief program for them, but not until after the November elections. WASHINGTON — Congress is back from its summer vacation, so the burning financial question on thousands of homeowners’ minds is this: Are you guys finally going to help consumers who are underwater on their mortgages, many of whom face crushing federal tax bills if they accept — or have already accepted — principal reductions by their lenders? This question is especially sensitive after the $16.65 billion toxic-loans settlement Bank of America and the Justice Department reached last month. Roughly $7 billion of the deal is earmarked for direct borrower relief, and a large chunk of that is expected to involve principal write-downs for underwater owners. Earlier settlements with...

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