For many struggling Floridians, going through a foreclosure, loan modification or short sale has been depressing enough. When it’s over, they might have thought their money woes would ease. But for some people, canceled or reduced mortgage debt comes back to haunt them during tax season.
Most debts that are forgiven by creditors, from credit cards to student loans, result in taxable income. But since 2007, many homeowners who have had their mortgage debt partially or entirely forgiven in foreclosures, short sales or loan modifications have been eligible for tax relief. The rules are complicated, though, and not everybody qualifies.
"I’ve never seen as much cancellation of debt as I’ve seen this year — it’s more than every other year combined," said Robert Troup, who has run Troup Financial Services in Port Orange for more than 30 years.