Mortgage Forgiveness Debt Relief Act of 2007 PRO TAX Max Garcia (916) Prepared by ©

Brief House Bill H.R Bill signed in to law on Dec 20, 2007 Amends the IRS Code of 1986 All local house member approved except Wally Herger representing 2 nd Dist. of CA including the cities of Redding, Chico, and Yuba/Marysville area © PRO TAX

Main Provisions of Act Became effective Jan. 1, 2007 Runs through Dec. 31, 2009 principal residenceDischarges qualified principal residence indebtedness from gross income. Basis in home must be reduced by any debt forgiven under this provision Does not apply to discharge of services performed by lender. © PRO TAX

Assume a $300,000 loan balance outstanding. $60,000 is equity debt $100,000 of the loan is forgiven. Only $40,000 ($100,000- $60,000) of the forgiven loan is qualified for exclusion under the new law. Example © PRO TAX

Misc. Tax Tips Last day to pay –Corporations and Partnerships is March 15 th, –Personal returns is April 15 th, Last day to file –Corporations and Partnerships is September 15 th, with extension –Personal returns is October 15 th with extension For 2007 forward, installment agreements will cost $105 or $52 if debited directly from your account. Failure to file or pay may increase your tax bill by 25% with an interest rate of 5% on all outstanding balance. With current storms causing much damage remember that any loss to home or property caused by natural disaster or theft can be deducted, less insurance repayment PRO TAX