Nextage property solutions team explains tax implications of a short sale

Nextage property solutions team explains tax implications of a short sale

Are there tax implications of an Arizona Short Sale? The Nextage property solutions team will assist with finding a property solution that will work for most sellers, but first you must understand the tax implications of an Arizona Short Sale.   Many questions regarding tax implications of an Arizona short sale and the tax consequence involves The Mortgage Forgiveness Debt Relief Act of 2007.   The Nextage property solutions team recommends you read The Mortgage Debt Relief Act of 2007 is applicable for all homeowners that need debt forgiven during the calendar years of 2007-2012. Nextage Realty property solutions team will want you to be very careful when evaluating your situation.  There are several times where forgiven debt isn’t taxable. The most common circumstances where forgiven debt is not taxable involve:

• Debt forgiven involving a principal residence.
• Non-recourse loan: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.
• If you are insolvent when your debt is cancelled.

Tax implications of any Arizona short sale must be confirmed with a CPA or an experienced tax advisor.  Some of the services that the Nextage property solutions team can help with the negotiation with your bank at no charge, as well as all the sales process. 

Our services are paid for by your bank through closing costs, only if we are successful in negotiating with your bank.   Nextage Realty provides solutions that we believe are in your best interest and represent you and your needs.  Because we are not licensed attorney’s it is also recommended that you consult a knowledgeable real estate attorney especially when the property you are short selling is a rental home.   There are variations to the tax implications of an Arizona Short Sale depending on the type of the loan (Purchase money loan, HELOC, or Private money); recourse vs. non-recourse, the tax consequence may change.  Nextage Elite Realty has helped coordinate and work through many of these questions with homeowners that are exploring their options.   All agents at Nextage find property solutions that work best for you.

So now you understand the tax consequences of a short sale – what are the benefits of doing a short sale?  

• Although Fannie Mae guidelines have been shifting, right now, under Fannie Mae a borrower can be eligible to purchase another home in two years instead of 5 – 7 years with a foreclosure.
• Neighborhood depreciation and vacancy crime.   If you choose to short sale your property your neighbors will thank you.   Many homes in Phoenix right now are left vacant and without attention or maintenance can go into disrepair and be ripe for theft and vandals.   This will further push the neighborhood values downward causing this problem to continue to spiral.  
• Minimizes the damage to your credit due to the way it is reported to the credit bureaus versus a foreclosure.  Instead of it being a foreclosure – it will show as missed payments prior to the short sale or foreclosure.   A short sale may be reported “Settled in full for amount less than owed”, “Paid as negotiated”, or something similar versus a foreclosure which will remain on a credit report for 10 years.
• Provides a way for those with a financial hardship to exit with dignity when a loan modification will only keep them in a home with a over-priced loan when compared to the current market value.
• A foreclosure may be viewed as a serious issue for current and future employers.