Mortgage Forgiveness Debt Relief Act of 2007

This act allows for the exclusion of debt forgiveness from income if the forgiveness was directly related to your home.  The exclusion is for years 20007 - 2009 and is for up to 2 million in indebtedness.

The Act beginning in 2008 allows widows or widowers to exclude gain from the sale of their home to exclude up to $500,000 if within two years of death of their spouse and it would have qualified at the time of death.  Previously the spouse was limited to $250,000 of exclusion.