Bill > H2996

This bill aims to provide tax relief for homeowners by excluding from their gross income the income attributable to the discharge or forgiveness of debt on their principal residence. The exclusion is capped at $2 million of forgiven debt ($1 million for married filing separately), and applies only to "acquisition indebtedness" (i.e., debt used to purchase, construct, or substantially improve the home). The amount excluded must be used to reduce the homeowner's basis in the property. The exclusion does not apply to debt forgiveness unrelated to a decline in the home's value or the homeowner's financial condition, and the principal residence exclusion takes precedence over an insolvency exclusion. The bill applies to debt discharges on or after January 1, 2013, and the state tax commissioner is directed to promulgate regulations to implement this provision.

Budget and Finance

https://malegislature.gov/Bills/192/H2996