Did the Mortgage Forgiveness expire on 12/31. I read homeowners would foreclose instead of short sale to avoid being taxed.

Asked by chatman12345, Chicago, IL Wed Jan 2, 2013

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8
Annette Levi…, , New York, NY
Wed Jan 2, 2013
Mortgage Forgiveness Act has been extended for 1 year but some states allow the lender to come after you for the money they lost. Is Illinois one of them?
0 votes
JIM Michaels, Agent, Chicago, IL
Wed Jan 2, 2013
The mortgage industry can breath a sigh of relief with the final fiscal cliff deal bringing back a popular tax break on mortgage insurance premiums and debt forgiveness for borrowers who go through a short-sale or some other type of debt reduction.
0 votes
Matt Laricy, Agent, Chicago, IL
Wed Jan 2, 2013
It was extended one more year.
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Bill J Delig…, Agent, Naperville, IL
Wed Jan 2, 2013
Mortgage Interest Deduction & Mortgage Debt Forgiveness were both extended.
0 votes
Jose Hernand…, Agent, Chicago, IL
Wed Jan 2, 2013
Hi Chatman,

Not sure if this source is right (see below) but it does look like the Mortgage Forgiveness Act was extended through 2013

Also, it sounds like homeowners are misinformed about the benefits of a short sale vs foreclosure. if you let the property go to foreclosure you could be responsible for the deficiency or if the bank forgives the balance then you could still be responsible for taxes. Short sale maximizes the sales price while reducing any losses, reducing the losses means less of a deficiency and/or less taxes you would have to pay.

http://www.sun-sentinel.com/business/realestate/house-keys-b…
0 votes
Manuel Brown, Agent, Chicago, IL
Wed Jan 2, 2013
Here is a good article from CNN.

Best of Luck,

Manuel Brown, Broker
iMove Chicago
0 votes
Jeff Nobleza, Agent, Evanston, IL
Wed Jan 2, 2013
Initial reports on Yahoo stated that the mortgage forgiveness act was extended for one more year.

However, note that there's many factors that are to be considered. Even if one doesn't short sale and decides to walk away from their home, the borrower can still have taxable income which is determined by calculating the difference on what the bank is able to sell the property for and what the borrower walked away from- again the mortgage relief act addresses this for one more year on one's primary residence.

Despite having an accounting background I put the disclaimer out there that I am not a practicing accountant and the above is a simplified response. One should talk to their CPA and see how their personal situation would be affected by current tax laws.
0 votes
Lucid Realty, Agent, Addison, IL
Wed Jan 2, 2013
Looks to me like it was extended.
Web Reference:  http://LucidRealty.com
0 votes
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