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Peaceandpowe…, Real Estate Pro in Bell And Hurd, Paine...

What are the consequences if you try to short sale a home in California but it does not close before the Mortgage Debt Relief Law expires in December?

Asked by Peaceandpowerparenting, Bell And Hurd, Painesville, OH Tue Jul 31, 2012

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My understanding is, if you don't close the escrow by the end of December, then the law won't apply to your situation, even you are half way through your short sale. Hopefully, the law will get extended as it was last year.
My advice is, if you are upside down on your mortgage, you should not wait till the last minute. Short sale the house before the time runs out. Or try to call your mortgage bank to do the loan modification.

Please feel free to call my direct line at 562-331-0047 if I am able to help or answer your question.

Betty Chang, Realtor
DRE#01466611
0 votes Thank Flag Link Tue Jul 31, 2012
Let's get it listed and sold and funded. We have time if we start today.

http://www.FrankandSheryl.com
http://www.Under640FicoScoreLoans.com
http://www.under640ficoscoreloans.com/Pages/ContactSheryl.aspx
Sheryl Arndt, Broker – Loan Officer
DRE# 01440252
NMLS# 297251
760-486-4225
0 votes Thank Flag Link Mon Oct 1, 2012
What are the consequences if you try to short sale a home in California but it does not close before the Mortgage Debt Relief Law expires in December?
It means if they don't extend it, and I doubt they will, you may be taxed both state and federal for the difference.
It is my opinion,....
lets say you bought a home for 500,000
lets say you sell the home for 250,000 and the closing costs were 50,000 Just using round numbers.
you will be facing taxes of 300,000 of income for 2013.
However I am not a tax person and you should verify this info with a CPA.
Time is ticking.

Makes you realize short sales and foreclosures should stop quite a bit next year.
The taxes will kill you if you foreclose or short sell in 2013
The IRS will never stop coming for you and the IRS can not be filed bankruptcy on.
they collect either way sooner or later.

Don't forget to vote best answer for those who give the best answer.

Harold Sharpe - Broker
So Cal Homes
(951) 821-8211
harold@southerncaliforniashortsale.org
http://www.southerncaliforniashortsale.org
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Wed Aug 1, 2012
The amount of forgiven debt may be taxed at your ordinary income rate if the act is not extended.
Good luck,
0 votes Thank Flag Link Tue Jul 31, 2012
It may be extended--- we have to wait and see. Otherwise, try to do the short sale sooner rather than later (just to be safe). Good luck.

Sara Mehrpouyan CDPE
Specializing in Short Sale & Foreclosure
Rodeo Realty
Direct 818-903-2040
Dre license #01712757
http://www.Short-Sale-Vs-Foreclosure-Help.com
0 votes Thank Flag Link Tue Jul 31, 2012
That's a very good question.. I would not even take that chance and weight. I will put the house on the market and sell it ASAP!
0 votes Thank Flag Link Tue Jul 31, 2012
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