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I'm the owner of a 2 family house. The home is used 45% for rental purposes and 55% as a primary residence. There was debt forgiven on the mortgage. Is the forgiven debt taxable or excluded as part of the mortgage relief act.


ANSWER


The BIDaWIZ Team's Answer:

You obtained one loan and used part of the loan to purchase a structure that you used for your personal residence and the other part of the loan you used for rental property. You may exclude 55% of the debt forgiveness for the part of the loan that you used for your primary residence. You may only exclude the other portion used for rental property if you were insolvent on the date before the forgiveness of the loan - up to 45% of the loan. You can reference this in IRC 108(a)(1)(E)

The BIDaWIZ Team

 

 

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