A consideration when doing a Massachusetts Short Sale is the potential of a tax liability. Short sales can have numerous advantages for homeowners that find themselves facing foreclosure and a short sale will most likely far out way any potential tax liability that may be incurred. When considering a short sale it is important to have all the information to make the best decision for your particular situation. While for most homes sellers involved in a short sale, it probably will not be a huge concern. I would suggest dropping quick call to an accountant, so you can fully understand if there will be any tax implications involved in doing a short sale. Where this may become an issue is when the bank issues a 1099 for the foregiveness of debt in a short sale. In the past any foregiven debt was considered income and may incur a tax liability.
The Mortgage Debt Relief Act of 2007
In 2007 George Bush enacted the The Mortgage Debt Relief Act of 2007. In a nut shell, it absolves taxpayers from paying taxes on "income" that was incurred on debt foregiveness of a primary residence. So any 1099 income occured from a short sale would probably not be cansidered taxable income. The one thing you really have to pay attention to, is if along the way you did a cash out refi and the money was used on something other than your home. The other thing to bear in mind is that in the tax code, there has always been a provision saying that if you are insolvent during the time of the foregiveness of debt no tax liability will be incurred. Insolvency is defined by your liabilities being greater than your assets.
Call your Certified Public Accountant
This information has been greatly simplified for you and for most people considering a short sale they will fall into one of the above categories. If you are considering a short sale and the potential tax implication concerns you, I encourage you to talk to a CPA so that you may understand what implications an issued 1099 may have for you on your taxes. Also realize we are talking about Federal taxes and each state may have different criteria for cancelled debt and tax implications.
reposted from Merrimack Valley Real Estate
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If you are a Massachusetts homeowner that has missed mortgage payments, or facing foreclosure or a home buyer interested in buying a foreclosure or short sale call Kevin at 978-360-0422. Kevin is an experienced Massachusetts Short Sale Real Estate Agent and can explain your possible options to foreclosure. Every situation is different and you have about five options to consider. If a short sale is your best option my short sale team will work to complete a successful short sale on your home. Combined we have successfully closed 100′s of Massachusetts Short Sales.
My closing ratio is almost 100% on Massachusetts Short Sales.
Short Sale Realtor Services in northeast Massachusetts, the Merrimack Valley and surrounding area. Andover Short Sales, Billerica Short Sales, Boxford Short Sales, Chelmsford Short Sales, Dracut Short Sales, Georgetown Short Sales, Groveland Short Sales, Haverhil Short Salesl, Lawrence Short Sales, Lowell Short Sales, Merrimac Short Sales , North Andover Short Sales, Newbury Short Sales, Newburyport Short Sales, North Reading Short Sales, Rowley Short Sales, Tewksbury Short Sales, Tyngsboro Short Sales, Westford Short Sales, Wilmington Short Sales, West Newbury Short Sales.
IMPORTANT NOTICE: Kevin Vitali of EXIT Group One is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
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