Bill Details
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This bill would make permanent a tax break for people whose mortgage debt on their main home is forgiven. Right now, when a lender cancels certain home mortgage debt, that forgiven amount can sometimes count as taxable income. This bill would continue to keep that forgiven debt out of federal taxable income for qualifying principal residence debt, so homeowners would not face a tax bill on that canceled debt after the current rule expires.
- It changes the tax code so forgiven qualified mortgage debt on a primary home stays excluded from income permanently.
- The rule applies to debt that is forgiven after December 31, 2025.
- The goal is to protect homeowners who go through mortgage restructuring, foreclosure-related forgiveness, or similar debt relief from being taxed on canceled home debt.
Official Summaries
Mortgage Debt Tax Forgiveness Act of 2025
This bill makes permanent the exclusion of the discharge of qualified principal residence indebtedness from gross income for federal tax purposes.
Under current law, a taxpayer may generally exclude from gross income up to $750,000 (or $375,000 if married but filing a separate federal tax return) from the discharge of indebtedness that is (1) incurred to purchase, build, or substantially improve a principal residence (or refinance such indebtedness); and (2) secured by the principal residence. The discharge must currently occur before January 1, 2026, and some limitations apply.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 917 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 917
To amend the Internal Revenue Code of 1986 to make permanent the
exclusion from gross income of discharge of qualified principal
residence indebtedness.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 4, 2025
Ms. Brownley introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to make permanent the
exclusion from gross income of discharge of qualified principal
residence indebtedness.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Mortgage Debt Tax Forgiveness Act of
2025''.
SEC. 2. PERMANENT EXTENSION OF EXCLUSION FROM GROSS INCOME OF DISCHARGE
OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.
(a) In General.--Section 108(a)(1)(E) of the Internal Revenue Code
of 1986 is amended by striking ``which is discharged'' and all that
follows and inserting a period.
(b) Effective Date.--The amendment made by this section shall apply
to indebtedness discharged after December 31, 2025.
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