Mortgage Debt Tax Forgiveness Act of 2025

# Mortgage Debt Tax Forgiveness Act of 2025 (HR 917) - Summary **What the Bill Would Do:** This bill would provide tax relief to homeowners who have experienced mortgage debt forgiveness. When a lender forgives or cancels a portion of a mortgage debt, the IRS typically treats the forgiven amount as taxable income to the borrower—potentially resulting in a significant unexpected tax bill. This legislation would exempt such forgiven mortgage debt from federal taxation, preventing homeowners from owing taxes on debt their lenders have written off. **Who It Affects & Key Details:** The bill primarily benefits homeowners who have negotiated loan modifications, short sales, or foreclosures where lenders forgive part of the debt. This commonly occurs when homeowners are underwater on their mortgages (owing more than the home is worth) or facing financial hardship.

By eliminating the tax liability on forgiven debt, the bill aims to provide relief during financially difficult circumstances. **Current Status:** As of now, HR 917 is in committee and has not advanced to a floor vote. The bill was introduced by Representative Julia Brownley (D-CA) during the 119th Congress. Like many bills in committee, it may receive further discussion, amendments, or be voted on by the full House, but has not yet become law.