Qualified Principal Residence Debt Exclusion

If the home acquisition debt on your principal residence was canceled after 2017, you may exclude up to $2 million ($1 million if MFS) from gross income for tax years 2018 through 2020. This exclusion was set to expire on Dec. 31, 2017, but was retroactively extended through Dec. 31, 2020. Give us a call if your 2018 or 2019 tax return included forgiven principal residence debt as taxable income. We can file an amended return. The 2018 amended return must be filed by April 15, 2022, so let us know as soon as possible.

This exclusion was extended again through Dec. 31, 2025. However, for discharges after 2020, you can only exclude up to $750,000 ($375,000 if MFS).

This article carries no official authority, and its contents should not be acted upon without professional advice. For more information about this topic, please contact our office.

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