JP Morgan’s massive $1.5 billion settlement will soon be a tax write-off blip on the financial institution’s books.
New York Times: “But the homeowners who receive the help will have to treat it as taxable income, resulting in whopping tax bills for many families who have just lost their homes or only narrowly managed to keep them.”
“They are not alone. A tax exemption for mortgage debt forgiveness, put in place when the economy began to falter in 2007, was allowed to expire on Dec. 31, leaving hundreds of thousands of struggling homeowners in financial limbo even as the Obama administration has tried to encourage such debt write-downs.”
“Officials in many states have been urging Congress to reinstate the exemption. ‘It is inherently unfair for the big banks to be allowed to write off these payments while struggling homeowners are hit with new tax bills they can’t afford,’ said Attorney General Martha Coakley of Massachusetts.”