Bill > S1521

This bill amends Massachusetts General Laws, Chapter 62, Section 2, to exclude certain forgiven debts related to a taxpayer's primary home from being considered taxable income. Specifically, it allows for the exclusion of "qualified principal residence indebtedness," which refers to debt used to buy or improve a primary residence, up to $2 million for those married filing jointly and $1 million for those married filing separately. This exclusion is contingent on the taxpayer reducing the cost basis of their home by the amount of the forgiven debt, ensuring that the tax benefit is not realized twice. The bill also clarifies that this exclusion does not apply to debt forgiveness resulting from services rendered to the lender or other factors unrelated to a decline in the home's value or the taxpayer's financial situation, and it establishes rules for how this exclusion interacts with other tax provisions, such as insolvency exclusions. This provision is retroactive, applying to debt forgiveness occurring on or after January 1, 2013.