US Senate has taken a great step recently by approving the Mortgage Tax Relief. Thousands of American families are facing financial problems due to the sub prime mortgage crisis. In this financial crisis, the homeowners first default and then lose their dream home. They even try to reduce their debt by working out with the lenders but then hit with huge tax bills due to the forgiven debt. So the US Senate has outstretched their helping hand by relieving them from at least the mortgage taxes.
If a lender forgives the debt of a home-owner, the forgiven debt is usually considered as income of the homeowner and he has to pay tax on that forgiven debt. But now the homeowners need not to pay tax on that forgiven debt as the Senate has approved the Mortgage Tax Relief bill. The bill also extends a provision allowing the homeowners to deduct mortgage insurance payments from their taxable income.