Short Sale Relief Continues for Your Home
If you have been considering a short sale for your home, you’ll be excited to know that the Mortgage Forgiveness Debt Relief Act of 2007 was extended through the end of 2013.
The Mortgage Forgiveness Debt Relief Act extends mortgage cancellation relief for home owners and sellers through disallowing taxes on the portion of their mortgage debt forgiven by their lender.
As short sales have represented a large sector in the housing market of late, the extension is seen by many as key to a continued recovering housing market. According to the U.S. Foreclosure & Short Sales Report™ complied by RealtyTrac, the last quarter of 2012, showed short sales as representing 19 percent of residential home sales in the United States. See the full report by clicking here.
According to RealtyTrac Vice President Daren Blomquist, the increase in short sales and distressed properties showed that “both lenders and at-risk homeowners are realizing that short sales are often a better alternative than foreclosure.” Blomquist went on to explain that had the Mortgage Forgiveness Debt Relief Act expired, homeowners would have seen their income tax increase since the unpaid loan balance created by the short sale would have been considered taxable income for many home sellers.
With this recent extension, if you are a home owner interested in a short sale for your home, you now have until December 31, 2013 to benefit from the reduced taxes provided by Mortgage Forgiveness Debt Relief Act.
Equal Housing Opportunity. Equal Opportunity Employer. /
January 02, 2013 at 9:32 pm, Richard Morris said:
Matt, thanks for sharing this very good news for the real estate industry and those who need to Short Sale their home in 2013. I wish the bill would have included more spending cuts as that is the REAL problem. May 2013 be filled with great success and achievement for you personally and professionally.
January 19, 2013 at 7:55 pm, Ryan Stone said:
This is a great thing for homeowners in the Chandler area as Arizona was hit extremely hard by the foreclosure crisis. I would recommend though that people preparing for a foreclosure or short sale speak with a tax professional as well as a Realtor. This bill will not protect everyone who loses their home as there are specific IRS rules as to what debt it covers.
March 03, 2013 at 4:40 pm, matthewcoates said:
Ryan, thank you for your input on this post (and the one for energy credits). I can’t tell you how valuable a tax professional’s advice is in this arena. Especially when it comes to short sales the owner’s individual situation could be very complex and Realtors are not in a position to make statements in regards to potential tax repurcussions.