Mortgage Forgiveness Debt Relief Act of 2007 is scheduled to expire Dec. 31.
Saturday, December 8, 2012 10:28 PM
Is shortsales a major part of your business? if so let me know your thoughts on the following topic
If the act expires, you will be asking people to pay cash on an income they never received and with cash they don’t have
As it is now, the amount the lender forgives on most primary residences is not taxable. No extension would make short sales less attractive next year and beyond because sellers would have to pay taxes due to the forgiven debt. This could result in tax hits of a few thousand dollars or considerably more.
Despite the potential tax liability, a short sale may still be the best choice — particularly if you owe much more than the house is worth, you’re getting divorced or you have to move quickly for a new job. Consult an accountant and see about your specific situation.
DEBT RELIEF ACT Q&A:
QUESTION: What’s happening?
ANSWER: The Mortgage Forgiveness Debt Relief Act of 2007 is scheduled to expire Dec. 31.
Q: Who’s affected?
A: If no extension is granted, homeowners will have to pay taxes on any unpaid balance forgiven by a lender after a short sale, modification or foreclosure. The Mortgage Forgiveness Debt Relief Act excludes that income from being taxed through Dec. 31.
Q: What’s happening?
A: Congress is considering extending the act, but it could cost the federal government $1.3 billion in lost revenue.
Q: What’s next?
A: A bill called the Family and Business Tax Cut Certainty Act of 2012 has been approved by the U.S. Senate Finance Committee and is slated for a vote in the full Senate.
Geneva Real Estate & Investments
©2012 The Palm Beach Post (West Palm Beach, Fla.)