WASHINGTON — Following the Senate's lead, the House of Representatives yesterday passed the “Mortgage Forgiveness Debt Relief Act” (HR 3648) to give homeowners facing foreclosure some temporary tax relief.
The bill would allow the refinancing of some subprime loans, removing an obstacle in the current tax code, which treats any amount of forgiven debt as taxable income. The bill provides for the discharge of indebtedness on loans up to $1 million and applies to a principal residence in order not to trigger taxes. It is restricted to discharges made between Jan. 1, 2007 and Dec. 31, 2009. The President is expected to sign the bill.
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