900 N. Kings Highway, Cherry Hill, New Jersey 08034 856.667.4100 · 215.563.0276 · Fax: 856.667.3652 Tax Tip of the Week For the week of February 11th, 2008 New law provides some mortgage foreclosure relief How do you pronounce MFDRA? The acronym is a tongue twister, but the Mortgage Forgiveness Debt Relief Act stands for help if you're a homeowner facing foreclosure. Here's why: Under prior law, if your lender forgave all or part of the amount you owed on your home mortgage, you could be taxed on the cancellation of that debt. Now, thanks to MFDRA, debt forgiveness on certain home loans can be excluded from your taxable income. The main points of the new law are: You can permanently exclude from income up to $2 million of qualified forgiven debt. The forgiven debt must be for original or refinanced loans secured by your principal residence that you took out to buy, build, or improve your home. The exclusion applies to debt forgiven due to a decline in the value of your home or to factors related to your financial condition. The amount excluded from income reduces your basis in your home. The law is retroactive to January 1, 2007, and applies to debt forgiven in 2007, 2008, and 2009. MFDRA also contains provisions unrelated to mortgage relief. Contact us for more information and money saving tips on this and other new tax laws that may affect your 2007 return. Click here to view previous tax tips. "Tax Tips" are published weekly to provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders, and current tax information. The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax-cutting information from time to time, please contact our office. We're here to help. Home