President Bush Signs Foreclosure Tax Relief Bill Into Law

President Bush signed into law today a new measure to provide tax relief for homeowners facing foreclosure or bankruptcy. The bill eliminates federal taxes due from homeowners who have had mortgage debt forgiven as part of a foreclosure or the renegotiation of a loan. Currently such debt forgiveness has been treated as taxable income.

The bill arose in response to the current mortgage crisis and is anticipated to reduce taxes on strapped homeowners by $650 million. “When you’re worried about making your payments, higher taxes are the last thing you need to worry about,” Bush said at the bill-signing ceremony. With some 2+ million adjustable-rate mortgages scheduled to reset through 2008, the new law will be a nice holiday gift for many homeowners facing tough times ahead.

If you fall into this group, be sure to have your paperwork in order including mortgage documents and/or sales contracts and then discuss the situation with your tax preparer to make certain you have filed the proper forms with your tax return.

Read the entire Press Release at WhiteHouse.gov