Back in 2007, Congress passed the Mortgage Forgiveness Debt Relief Act, which eliminated the tax consequences for homeowners short selling their home in most circumstances (the primary exception being second loans not used toward the purchase or improvement of the property.) Until that point, homeowners were being taxed on the amount the mortgage company wrote off as if it were income gained – a decided issue come the following April.
Those days are returning and quickly.
The Mortgage Forgiveness Debt Relief Act is scheduled to expire in December, meaning that without an extension of the law there will be some fairly steep tax consequences for anyone who attempts to get out from under a mortgage they can’t afford after the end of this year.
Combine this with the near-historic low inventory currently on the market and now is the time for those on the fence debating whether or not to do a short sale to start the process, make sure it’s the right solution and if so get your home on the market.
You can read more information about getting started with a short sale here, or simply call me today.