If you are a seller and you owe more than your house is worth, you may not want to kick the ball down the street until next year. The debt forgiveness bill that expires in 2012 for permanent residences is something sellers should take a serious look at. For example, if I purchased a home for $200,000 and then sold it at market value for $100,000, I would not have to pay taxes on what is considered $100,000 in earnings. After December 2012, this may no longer be available to borrowers!
Debt Relief Act of 2007
In response to the on-going mortgage crisis, the government enacted the Mortgage Forgiveness Debt Relief Act which has been extended to December 31, 2012. The Act allows that debt secured by a taxpayer’s primary residence, up to $2,000,000 in loan value, may be excluded from taxable income.
Every sellers radar screen
Bottom line is anyone even considering short selling in 2013 and is challenged financially needs to act now. The fact that this debt may be considered gain after 2012 should get some serious buyers off the fence now. When dealing with Short Sales and Foreclosures a borrower will receive Debt Forgiveness for the remainder of 2012. If you would like to speak to our Short Sale Negotiator, please email us at email@example.com or call us direct at (843)842-0805. Timing is everything.