Foreclosure in 07017>Question Details

Meme, Other/Just Looking in 07017

If the property is sold short sale will the owner have to pay taxes on the balance owed to the m0rtgage company

Asked by Meme, 07017 Sat Feb 18, 2012

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Marsha Bowen-Washington’s answer
Hi Meme,

The lender will send the owner a 1099 which shows the outstanding loan balance. It's important that the owner works with a competent tax person to make sure they process the proper documents to be exempt from the taxes. The Mortgage Stabilization Act protects homeowners of primary residences only until 2012. An extension has been requested from President Obama.

Hope this helps!
0 votes Thank Flag Link Mon Feb 20, 2012
That money is not taxable income at this time. The property sold must be your primary residence, though.
Contact an accountant for specific help for your individual needs.
Web Reference:
0 votes Thank Flag Link Mon Feb 20, 2012
Currently taxes are not assessed if the property sold is the primary home. The current deadline may or may not be extended. One should consult a tax professional for a complete understanding on how the tax responsibilities will or will not apply to them.
0 votes Thank Flag Link Sun Feb 19, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
No, the owner will not have to worry about that. Even though ordinarily debt discharged is taxable, the federal government passed a law that tempoarily provides relief to home owners who opt for short sale. But this law currently exipires on December 31, 2012 but proposal has been made to extend it through 2013. Also note that it applies to principal residence only. There's also a proposal to extend this law to rentals but it is not yet in effect.
0 votes Thank Flag Link Sat Feb 18, 2012
I have blogged about this before and have put a link in below for you. It depends on when the short sale gets finalized and a few other details.

For the best advise consult with your tax attorney or tax advisor.
0 votes Thank Flag Link Sat Feb 18, 2012
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