How much will I pay in taxes if I settle a $70,000 home equity loan for $3000?
Answers | 1
You should check with a Certified Public Accountant (CPA) in your local area for specific tax advice. There was a forgiveness program for canceled debts that expired 12-31-2013. If you settled the loan in 2013 you may qualify under that program. If you settled the debt in 2014, the canceled portion of the loan ($70,000 minus $3,000 = $67,000) will likely be considered taxable income for 2014. It is possible Congress will renew the debt forgiveness program after the November elections but no one really knows if any action will be taken. If you must include the $67,000 that was forgiven as income, the actual tax due will depend on your tax bracket. If you have a tax preparer, check with him or her. If not, find a local CPA to go over it for you. Good luck!