The public comment period for this legislation has now ended.

TITLE III - Tax Provisions

Sec. 303. EXTENSION OF EXCLUSION OF INCOME FROM DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS. (1 Comment) subscribe to the comments feed

  1. EXTENSION.Subparagraph (E) of section 108(a)(1) of the Internal Revenue Code of 1986 is amended by striking January 1, 2010 and inserting January 1, 2013.

1 comment on Sec. 303. EXTENSION OF EXCLUSION OF INCOME FROM DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

  • The short title of the act that added section 108(a) is: ‘‘Mortgage Forgiveness Debt Relief Act of 2007’’.

    This protects homeowners from having to pay taxes on any amount their mortgage company forgives them if their loan is modified. Extending this protection appears to be a win for "Main Street".

    However as Martha Coakley, attorney general of Massachusetts, points out in the Boston Globe there were over 4,700 foreclosures in that state last year. Loans were modified only 144 times and of those there were virtually none where the amount decreased. So this is only a win if financial institutions are willing to forgive a portion of the loan, which does not seem to occur in real life. The financial institutions want every last dime.

    Here is the blurb on the original act from the White House, which describes how great it would be: http://www.whitehouse.gov/news/releas...

    Ironically the White House blurb points out there is more work to be done to fix the housing market troubles.

    Here is Coakley's article that explains the reality:
    http://www.boston.com/bostonglobe/edi...

    Section 303 is very nice window dressing but does not appear to come into play in real life. What percent of troubled loans are actually modified to reduce the indebtedness so a homeowner could take advantage of this tax break?

    posted by Barbara B. at October 2, 2008
The Sunlight Foundation supports, develops and deploys new Internet technologies to make information about Congress and the federal government more accessible to the American people. Through its projects and grant-making, Sunlight serves as a catalyst to create greater political transparency and to foster more openness and accountability in government. This Site may contain links to Internet sites that are not operated by Sunlight Foundation. These links are provided as a service and do not imply any endorsement of the activities or content of these sites, nor any association with their operators. Sunlight Foundation does not control these Internet sites and is not responsible for their content, security, or privacy practices. We urge you to review the privacy policy posted on web sites you visit before using the site or providing personal information.