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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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My children are leaving their house after trying for months

Customer Question

My children are leaving their house after trying for months to work out a plan with their lender to lower their. They live in Calif. What are the federal tax ramification?
Submitted: 6 years ago.
Category: Tax
Expert:  Wallstreet Esq. replied 6 years ago.
IF THEY LET THE HOME GO INTO FORECLOSURE, UNDER RECENT FEDERAL LAW, THEY WILL NOT OWE ANY FEDERAL GAINS TAX ON THE BANK BALANCE. FROM THE IRS WEBSITE YOU CAN FIND MORE INFO.

The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

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