Attorney General Chris Koster reminds Missourians who received mortgage relief, including principal reduction and short sales, that their primary residence may be able to consider the value of the relief received as non-taxable income.
The National Mortgage Settlement announced last February required the settling banks to provide more than $16 billion to consumers nationwide in the form of principal reductions, short sales and other relief over three years. Koster and Attorneys General sent a letter to Congress in November asking them to extend a measure set to expire at the end of 2012 to protect that relief from being treated as taxable income, and Congress passed the extension.
Although banks may send IRS 1099 forms to Missourians indicating the amount of relief provided under the National Mortgage Settlement being reported to the IRS, the relief for a primary residence will likely not have to be counted as taxable income. The same exclusion will probably not apply to second homes or investment rental property.
Missourians with questions about the National Mortgage Settlement can contact the Missouri Attorney General’s Mortgage Hotline at 855-870-7676.