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.