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how does a loan mocification affect my taxes?

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June 13 2011 - Los Angeles
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You should consult a tax advisor.
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June 14 2011
Assuming there is no loan forgiveness the modification will have little effect on your taxes.  Your interest deduction though probably will be less.  To be sure you should contact your tax professional to see how it effects your specific situation.
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June 14 2011
Hi. I'm a tax professional in Los Angeles (in addition to being a real estate broker).

A loan modification does not directly impact your taxes unless the bank forgives part of the balance (most don't).

Indirectly, you will be impacted in terms of itemized deductions because your mortgage interest will be lowered so you won't have as many deductions. You may want to re-adjust your withholdings from pay (decrease by one) so that you don't have a tax liability at the end of the year.
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June 13 2011
A good question for a tax advisor or accountant.  Seek the proper professional advice and not the answers you may receive here.  Everyone's situation is different and needs to be looked at in detail.
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June 13 2011
That sounds like a perfect question for your CPA or tax attorney and a bad question for any lender to attempt.
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June 13 2011
 
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