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A Significant Short Sale Deadline Will End This Year
Tax relief deadline for short sales explained by my Active Rain Colleague Ed Silva. If you are thinking about a short sale of your home you need to read Ed's comments below. A Significant Short Sale Deadline Will End This Year For home owners contemplating a short sale, a significant tax relief benefit will expire on Dec 31. This is important as short sales are not quick transactions and not only must time be allowed for the house to get a qualified buyer, but also the time to approve the short sale by the bank must be factored. The big benefit to short sale sellers is the tax relief exemption. Under this exemption, sellers can exclude as income the amount of debt on their principal residence that is forgiven by their banks. Unless the law is renewed, after Jan 1, 2013, anyone that participates in a short sale in which the lender allows the home to be sold for less than the value of the outstanding mortgage will have to declare the difference as income on their tax returns. The sellers will be given an IRS form 1099 shortly after closing for this ‘phantom income. Having a bank allow the sellers ... more
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