Issue Number: Rev. Proc. 2021-47
Rev. Proc. 2021-47 provides guidance on the income tax treatment and information reporting requirements for payments made to or on behalf of financially distressed individual homeowners by certain entities with funds allocated from the Homeowner Assistance Fund (HAF), which was established under section 3206 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2, 135 Stat. 4 (March 11, 2021) (ARP), in response to the coronavirus disease (COVID-19) pandemic.
This revenue procedure provides that a payment made by a State or State entity to, or for the benefit of, a homeowner from funds allocated from HAF is a qualified disaster relief payment within the meaning of § 139(b)(4), and such payments are not included in the homeowner’s gross income. In addition, the revenue procedure provides an optional safe harbor method for homeowners to compute their itemized deductions for mortgage interest and real property taxes when in the same taxable year the homeowner has received, or benefited from, a HAF payment from a State or State entity that may be used to pay a portion of a homeowner’s mortgage interest and/or real property taxes and the homeowner has also paid a portion of the mortgage interest and real property taxes with funds from the homeowner’s own sources.
This revenue procedure also provides guidance to States, and mortgage lenders and servicers regarding information reporting requirements relating to certain HAF payments
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