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Yes. Although under a recent tax law in some very specific cases it may not be. Borrowed money is not taxable, because you incur a liability to repay exactly what you borrowed...your actually not worth anything more after borrowing than you were before...you new obligation offsets the increase in cash. Clearly, if someone gives you money in a business deal, it is income. Agreeing to not collect back all they gave you, cancelling debt, is the same as giving another money. You are enriched by the amount of liability that was dropped.
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Is cancellation of debt taxable?
Yes, it is a taxable event. I got caught myself one year by not reporting it as income.
On a repossion can the IRS collect for the bank?
No. But any debt that is forgiven is taxable as income.
Mortgage Required Income?
Mortgage Required Income What income is required to qualify for a mortgage? That largely depends on your monthly debt payments and the current interest rate. This calculator collects these important variables and determines your required income to qualify for your desired mortgage amount.
Is it hard to get a mortgage loan?
No, unless you have a high debt to income ratio.
Can a Repo show as receiving income to the IRS?
Yes. If the bank writes off part of your car loan as a cancelled debt, they will report it to you on Form 1099-C. Cancelled Debt is taxable as income under the Internal Revenue Code and should be reported on your tax return. Cancelled debt is not taxable as income, though, if it is cancelled through a bankruptcy proceeding our you are insolvent on the date that the debt was forgiven.
What type of debt is held from taxes?
While your question is haed to decifer: Debt, as in borrowing money, is never income and never taxable.
How does increased debt affect the debt ratio?
Your Debt/Income Ratio is simply your total monthly mortgage + installment + revolving debt payments divided by your total month gross income. eg. If your income is $4000 / month, your mortgage payment is $1000/mo, Auto loan is $500/mo, and total credit card minimum payments are another $500/mo, then your debt/income ratio is $2000 / $4000 = 0.5 (50%) In most cases mortgage lenders do not like debt ratios over 45%.
What information is needed for a mortgage calculator?
"The information that is needed for a mortgage calculator will be income and source of other income, debt and other assets that can be used to determine payments."
What is the maximum percentage of a borrower's income that can be used to make the monthly mortgage payment called?
Debt to income ratio
Is bankruptcy discharged debt considered taxable income?
No, discharge of debts through bankruptcy do not create taxable earned income. However, you can have Capital Gains or Losses if any real-estate was disposed in that bankruptcy.
What are the Repercussions of foreclosure?
The repurcussions of foreclosure individually are: 1) your credit report is dramatically lowered, and it will be very difficult to get another mortgage in the future. 2) Even after the lender has foreclosed, they often still have the ability to put a judgment against you, which can lead to garnished wages, and will keep you from being able to purchase other real estate. 3) If the bank does not go after you through a judgment, they must report to the IRS that the they "forgave" the debt (if your house was not worth as much as your mortgage debt), and the IRS considers that to be income, and will tax you on it. But, as of early 2008 (or so), the taxable income (loan forgiven) is non taxable.
When filing chapter 7 does the IRS tax your forgiven debt as income?
There are separate calculations, but normally, the otherwise taxable cancellation of debt income (COI) doesn't happen if it was created as part of the BK process.
