The collapse of the housing market and plunging home prices left millions of people stuck owing more on their mortgages than their homes were worth. Some have worked with their banks to reduce the loan amount to avoid foreclosure or enable a sale.
In 2007, Congress adopted a law that spared those homeowners from being taxed on the amount of the loan that was forgiven.But that tax break expired in December, and now the forgiven debt can be counted as income by the IRS. Housing advocates worry that the lapse could scare homeowners away from making a deal with their bank, which could disrupt efforts to reduce foreclosures and harm borrowers who were just getting back on their feet.
Stella Thompson said she is looking at a $30,000 tax bill on her Seattle area home.
No problem. As long as the state gets its bucket of blood to squander on trillions of dollars of useless crap, why, everything is a-okay. Oh – and as long as the TBTF banks don’t get charged anything extra….