Basics

• According to the IRS, the Mortgage Debt Relief Act of 2007 lets taxpayers exclude from their taxable income the discharge of debt amount on their primary home.
  
  

Scope

• The IRS stipulates that the legislation also allows taxpayers to exclude from taxation any debt reduced through mortgage restructuring and mortgage debt forgiven in connection with a foreclosure.
  
  

Limitations

• This exclusion from taxable income of forgiven debt applies to calendar years 2007 to 2012. The exclusion is limited to $2 million.