Canceled Debts and Mortgages

I've updated the information on canceled debts and mortgages. Canceled debts are considered taxable income, unless an exclusion applies. There are three important exclusions for insolvency, for bankruptcy, and for certain types of mortgage debt.

People who have lost their homes will need to know how much of their mortgage debt was used to buy, build, or improve the property, and how much was used to consolidate debt or used for other purposes, as this will impact how the mortgage debt is reported on their tax returns.