An Act relative to the relief of mortgage debt

This bill amends Massachusetts tax law to allow residents to exclude forgiven mortgage debt from their state taxable income, directly affecting homeowners whose loans are reduced through restructuring or foreclosure. The measure permits an exclusion of up to $2 million for single filers or married couples filing jointly, provided the debt was used to acquire the home and the forgiveness resulted from a decline in property value or the taxpayer's financial condition. Unlike the federal tax code, which allows this exclusion only for insolvency, this legislation creates a specific state provision that also reduces the taxpayer's basis in their home by the amount of the excluded debt. The law applies retroactively to debt discharges occurring on or after January 1, 2013, and requires the state tax commissioner to issue regulations within 180 days of enactment.