H.R. 3648

              Mortgage Forgiveness Debt Relief Act of 2007

Permanent exclusion from gross income of discharged home mortgage indebtedness.

The bill would amend current law, which requires taxpayers to include discharges of mortgage

indebtedness as income and to pay tax on this income. The bill would provide a permanent

exclusion for discharges of up to two million dollars of indebtedness (on or after January 1,

2007 ) which is secured by a principal residence and which is incurred in the acquisition,

construction, or substantial improvement of the principal residence. Instead of including this

amount as income, the basis of the individual’s principal residence would be reduced by the

amount excluded from income under this bill.