Is the $3,000 relocation fee received from HAFA (Home Affordable Foreclosure Act) after a short sale considered taxable income?
I have come accross the following:
While there is no IRS directive that I can point you to, the Internal Revenue Service has consistently held that governmental payments made under governmental programs for the promotion of the general welfare are not includible (sic) in an individual recipient’s gross income (general welfare exclusion). This includes borrower incentive payments received under any TARP program including the borrower relocation incentive under HAFA. However, to the extent that moving expenses are tax deductible, a borrower in a HAFA transaction must reduce the moving expenses by the amount of the relocation incentive before itemizing this expense. In other words they can’t double dip.”
I have also come accross this interpretation:
Per the IRS, the program is also called “Cash for Keys” and the amounts are taxable but not subject to self-employment tax (1099-MISC box 3):
What's your read...
Thanks,
Taxadvisor VA
I have come accross the following:
While there is no IRS directive that I can point you to, the Internal Revenue Service has consistently held that governmental payments made under governmental programs for the promotion of the general welfare are not includible (sic) in an individual recipient’s gross income (general welfare exclusion). This includes borrower incentive payments received under any TARP program including the borrower relocation incentive under HAFA. However, to the extent that moving expenses are tax deductible, a borrower in a HAFA transaction must reduce the moving expenses by the amount of the relocation incentive before itemizing this expense. In other words they can’t double dip.”
I have also come accross this interpretation:
Per the IRS, the program is also called “Cash for Keys” and the amounts are taxable but not subject to self-employment tax (1099-MISC box 3):
What's your read...
Thanks,
Taxadvisor VA
Comment