President Signs Mortgage Debt Relief Legislation

On December 20, 2007, the President signed the Mortgage Forgiveness Debt Relief Act of 2007. The legislation includes a three-year mortgage debt forgiveness exclusion of up to $2 million in qualified acquisition debt on a principal residence, retroactive to January 1, 2007. The legislation also extends the mortgage insurance premium deduction for three years, includes an exclusion for benefits to volunteer firefighters and emergency medical responders, extends the availability of the joint return sale of a principal residence exclusion for the surviving spouse for two years, clarifies student housing eligible for the low-income housing credit, and provides alternative tests for qualifying as a cooperative housing corporation. To pay for these provisions, the legislation increases the penalty on failure to file partnership returns, expands the penalty to S Corporation returns, and modifies the estimated tax payments by large corporations.