This means that if you were to strategically default on your mortgage after 1/1/2013 and you were underwater $100,000 you’d owe the IRS income tax on that amount. If you do it this year you won’t owe income tax on the debt relief.

In an article for the ABC15.com investigative report, Dean Wegner with WJ Bradley Mortgage Capital writes about his conslusion that you have to do what’s best for yourself and family rather than the mortgage company. He spells out the damage voluntary foreclosure will have on your credit score and makes the point that the money spent getting even on an uderwater property could force you to retire ten years later than if you default and move on.

I’ve been watching this issue for some time, first because of the “moral” weight put on homeowners that isn’t put on corporations making the stretegic decision to default on a loan. Then watching the housing value numbers as this recession has continued for the past four years I fear that millions of homeowners who are paying for mortgages that out strip the value on the property will add to the instability of our recovery.

With the ending of the mortgage forgiveness act there seems to be a new impetus to legislating debt reduction fincancing for all borrowers.