Right now if you are a homeowner who short sales your primary residence, the Mortgage Debt Relief Act of 2007 will allow the ‘forgiven’ debt by the banks to be non-taxable income (read IRS publication 4681 for all information) to you, the selling homeowner, on your principal residence (with some caveats). This remains good news for short sale homeowners right now.
Unfortunately, short sales take time…some more time than others and one never knows how a bank is going to be once a buyer's offer is presented to them that is less than the dollar amount owed on the mortgage. As a North Kingstown short sale agent, I have had short sale sellers that have reached negotiated settlements and waiver of deficiency judgments in as long as 4 months. Remember the first buyer may back out and even the second and there you are losing time finding another buyer for your home...as the time clock ticks by.
If you are in a hardship situation and are thinking about selling your home, meet with an experienced short sale realtor now. Getting your home on the real estate market needs to happen sooner rather than later.
Right now the government is not talking about extending this Mortgage Debt Relief Act of 2007 program. What it means to you, the homeowner, selling your home as a short sale is that if you close after 12/31/12, you will be responsible for paying Federal income taxes on the amount the bank forgave on your mortgage. So not only have you had to sell your home but now you must come up with the money to pay Uncle Sam (IRS). I am not a certified public accountant but I recommend that you meet with a CPA to talk about the tax consequences of any short sale action you may do.
It is important to be ahead of the curve on the short sale issue coming at struggling homeowners by the end of 2012. Be prepared and meet with a short sale agent that will work with you to get your home on the real estate market and marketed well, get a bona fide offer on your home, negotiate the best settlement deal with the bank and get it closed BEFORE 12/31/12. Have the short sale discussion and be ready to go in the New Year.
As North Kingstown short sale agents, my team helps RI homeowners everyday through the short sale process successfully. Call me at 401.529.7849 today for a confidential discussion on your home and mortgage situation. Timing of Short Sales in 2012.
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Ginny Lacey Gorman is a North Kingstown Realtor who works and knows the North Kingstown RI geographic area of homes for sale, schools, happenings, important tidbits of information and businesses well. Waterfront, water view, ocean front, luxury and coastal RI real estate are her specialty, so call Ginny for your buying and selling home needs. As North Kingstown short sale agents, she and her team helps clients navigate successfully the rough short sale waters throughout RI, contact Ginny if you are having trouble paying your mortgage. When you are in need of an internet savvy RI realtor® who sells homes in this real estate market, call Ginny today at 401.529.7849.
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17 Comments on Timing of a Short Sale in 2012
There must be some enterprising federal legislator working on extending that deadline as we speak.
While we hope that the deadline will be extended, there are no guarantees, especially in an election year. Well written and persuasive post on the need to act now.
Hi Ginny,
This is a very useful post.
You are right. The clock is ticking and the waiver of taxes on the money you lost will be over before you know it.
Thanks for passing on this information.
Phil
Jim, i would hope also but i would not encourage any homeowner struggling to count on our beneficient Congress for action...
Anne, please pass all info on to clients in your area too
Phil, 2011 flew by for homeowners in the short sale process...it brings home the notion that some sales do not flow as quickly or well as you like...time counts against them.
Good morning, Ginny. Although I do not have a dog in the hunt as I am not a Re-la-tor (in the south it is a 3 syllable word), I did find the post informative...
It is amazing just how fast a year can truly fly by and because it can this post is a real wake up call to those who are considering or needing to sell their home especially as a short sale. Talk to an experienced short sale agent now and get the facts to make a sound real estate decision.
Good information, Ginny.....time flies when we're having fun.....this is one perfect reason why potential sellers in the North Kingstown area should select Ginny Gorman, the North Kingstown Realtor of choice.
Michael, i have that problem with pronunciation too...decided to say real estate agent from now on...
Martha, time marches and stuff happens and sometimes short sales do not go the way they should...need to be pro-active here...spread the word.
Barbara, are we having fun...i wish it were warmer & i'd have more! lol
Hello Ginny...great post!! Many of us are aware of this relief but are not fully aware of the importance of concluding the Short Sale early to avoid any pitfalls. Thank you for sharing.
Ginny: This is excellent short sale information every consumer who is contemplating going down this road needs to be aware of and understand.
Sergio, just need to be aware of the time line...
Anita, there are many sellers still sitting on the fence about it...need to move off of it & it is far better than a foreclosure.
Petra, thank you so much for pushing this forward to ...you & I spend a lot of time on short sales...
This will probably be extended for another 5 years or so. There is NO WAY the Feds are going to bury all homeowners in distress. This debt relief act will be extended as long as needed so ALL American Homeowners who are struggling with a foreclosure will get this benefit. Is a matter of time so don’t worry!!!
Excellent post! With this act set to expire and no formal discussions of its extension currently in process, we really do need to make sure our distressed and short sale clients take advantage of this opportunity. The earlier they start the better off they will be. Hopefully, NAR will start working on making that extension happen. Thanks for posting and have a very happy new year!
Ginny, This is a great post. Sellers looking for a short sale should call you.
David, never say never...it is a wait and see but i do not want my clients stuck paying anymore then need be..
Laurie, NAR needs to get on the wagon & do what we pay are dues for as far as I'm concerned...the push should already be on..
Gita, many thanks & let us hope for the best for short sales in 2012 & beyond.