TAX BREAK FOR MORTGAGE DEBT FORGIVENESS

President Bush signed into law today a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 to December 31, 2009. Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances).

For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer's principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648.

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

MIT PHYSICS LECTURES AND MUCH MORE, FREE ONLINE!

Did you know about the free on-line lectures available from the Massachusetts Institute of Technology's OpenCourseWare program? Go take a look!

Click here to read Sara Rimer's article in the New York Times about Walter H. G. Lewin, one special physics professor who's "now emerged as an international Internet guru thanks to the global classroom."

Enjoy this video of the Indiana University men's a cappella group Straight No Chaser doing a special holiday medley!

THE COST OF STAND-BY POWER

Ever wonder exactly how much power is actually being used by appliances "that are always 'on' while seemingly 'off'," such as a television?

C. CLAIBORNE RAY of the New York Times has the answer right here, including a laboratory Web site of Standby Power Data that "provides tables of the minimum, average and maximum power used by appliances that cannot be switched off completely without being unplugged."

BEN STEIN'S "LESSONS FROM THE PITS"

When he isn't giving away his own money on Comedy Central or lending his talent to making memorable characters on the Big Screen, lawyer and economist Ben Stein has some pretty wise things to say about life.

Click here to read some of his thoughts on travel, investment, spending, and heroism--all with a good dose of his usual wit, of course.

The 53 Places To Go In 2008!

"What’s on your travel itinerary in the new year?"

From Laos to Hvar to Death Valley to Mozambique, click here to see beautiful photos from around the world and find out which destinations made the list!

List compiled by Denny Lee, courtesy of the New York Times.

INFORMATION FOR TAXPAYERS IN FORECLOSURE


Provided courtesy of the Internal Revenue Service

The IRS has developed information and Web resources to assist taxpayers with the tax issues presented by foreclosure.

Key Points:

*The Internal Revenue Service unveiled a special new section on www.IRS.gov for people who have lost their homes due to foreclosure.

*The IRS also reassured homeowners that although mortgage workouts and foreclosures can have tax consequences, special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.

Resources:

*IRS 2007-159 – The news release IR 2007-159 provides additional background. The
news release and FAQs can also be found at http://www.irs.gov/newsroom/article/0,,id=174022,00.html

The direct link to the FAQ’s is http://www.irs.gov/newsroom/article/0,,id=174034,00.html