Time is running out! Upside down homeowners need to pursue their short sale now before the deadline.
Thinking of selling your home but not sure if now is the “right time?” If you are thinking of doing a short sale, now IS the time! The clock is now ticking for home sellers that are considering a short sale.
You didn’t know there was a deadline?
Time is running out for home sellers to take advantage of the program and save themselves tens of thousands of dollars. Mortgage Debt Relief Act was always intended to be a temporary solution and it is now set to expire at the end of 2012.
Cancelled debt is normally taxable to you, but there are exceptions. One of those exceptions is available to homeowners whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012 aka a short sale.
According to the IRS, “the Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.”
That means for most home sellers, the IRS will not make you pay taxes on the debt forgiveness if you close on your short sale before December 31, 2012.
Click here for the details on the Mortgage Forgiveness Debt Relief Act: http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation
Click here to view 10 Key points on the IRS website regarding Mortgage Debt forgiveness: http://www.irs.gov/uac/Mortgage-Debt-Forgiveness:-10-Key-Points