When Louisiana homeowners sell their properties at a gain, they may receive waivers from capital gains taxes. However, the National Association of Realtors has recently stepped up to say that equivalent debt relief should be permanently included in tax laws for homeowners whose investments do not turn out so well. NAR representatives speaking on the topic recently stated that the scales are currently tipped against homeowners facing financial crises; in other words, the Internal Revenue Code favors those doing well and penalizes those who lose their homes to mortgage debt.
Temporary policies were implemented in 2007 that relieved people from tax obligations when they obtained mortgage debt forgiveness. Such policies expired last year, although a retroactive extension was applied. The NAR has called for permanent inclusion of tax obligation protection in the tax code to increase fair treatment between those who enjoy gain on home sales and those who default on their loans.
There are currently approximately 2.5 million homes in the nation with negative equity. Permanent exclusion from tax obligations regarding debt forgiveness associated with foreclosures, short sales or loan restructures may help families struggling financially avoid additional financial hardships. The NAR contends that taxing forgiven debt as income is unfair and potentially detrimental to those already experiencing financial difficulties.
More than one Louisiana homeowner may experience similar financial problems; however, their debt relief solutions may vary, depending on the details of their individual situations. It often helps to ask someone well-versed in bankruptcy law and tax regulations to help determine the best course of action to resolve a serious financial problem. Anyone seeking guidance regarding a specific matter may turn to an experienced bankruptcy law attorney for support.
Source: mortgagenewsdaily.com, “NAR: Debt Forgiveness Should be Permanent Part of Tax Code“, Jann Swanson, March 15, 2018