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Good News! Tax Break for Mortgage Debt Foregiveness! A Change that will help!

GOOD NEWS!

Today is a day of some really good news that will help the people that find themselves faced with foreclosure and cannot find a solution to save their home by using one the plans that have been created for those that meet a certain criteria and they were not able to do a workout with the lender(s).

If the homeowners find that there are no workout plans that fit them and they have to seek a short sale approval and if they are lucky enough to get an approval for the short sale, they now do not have to worry about the difference between what the actually owe the lender and what they were able to sell the home for. This is called debt forgiveness. With this law, they are truly forgiven.

This law will ease the after shock of losing your home and then finding yourself owing the IRS that difference ~~~ the debt will be fully forgiven ~~ if that homeowner is in hardship.

TAX BREAK FOR MORTGAGE DEBT FORGIVENESS
President Bush signed into law today a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 to December 31, 2009. Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances).

For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer's principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

HAPPY and SAFE HOLIDAY SEASON to you and your family & Friends!

the Mother and Daughter Real Estate Team ~ Short Sale Specialists

Perfect Financial Solutions - We care about our clients Real Estate needs
Tel.: 866-750-8282
Fax: 209-879-4601
http://www.motheranddaughterrealty.com

Happy Holidays, stay warm, safe, (full) and have a Happy, safe, healthy and prosperous New Year.

Posted by Rosemary Brooks -Mother & Daughter (866)-750-8282 on 12/21/2007 12:57 PM

Comments (10)

foreclosure, debt forgiveness, short sale, real estate, perfect financial solutions, rosemary brooks

10 Comments on Good News! Tax Break for Mortgage Debt Foregiveness! A Change that will help!

It always seemed to me that this was a sort of "piling" on....kicking someone when they were down! I'm glad that they are changing things.

Bob Mitchell

ValueList Real Estate Services, Inc.

12/21/2007 01:04 PM

by ValueList Real Estate Services, Inc.

Bob - same here. I think this is a step that will help with the after shock of losing a home. I hope they don't stop there and help more and more. God help us all. Thanks for stopping by and Happy holidays.

12/21/2007 01:18 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

I am happy for those that are personally effected - paying taxes on write-off debt is like rubbing salt in the wounds. It hurts really bad, but makes it heal quicker. I am not happy that the rest of us will make up the difference in our taxes.

12/21/2007 01:19 PM

by Chris Pollinger (Mastery Coaching)

Chris ~ no one wants to pay anymore taxes. No one that I have met. But I think that we will be hit no matter what withthe situation of foreclosures the way that it is. We are going to get hit. We get hit every way (gas, food going up, unemployment, politicians raises (opps did I say that), etc. We are going to get hit.

Happy Holidays - stay safe, healthy, warm, smiling and prosperous for the New Year.

12/21/2007 01:26 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

Rosemary this is one law I agree with. I have sellers right now facing short sales who will be very relieved to hear this.

12/21/2007 04:35 PM

by Bryant Tutas-Tutas Towne Realty, Inc

Bryant ~ I know, me too. I am spreading the word, getting those smiles. I hope that there are more really good news that cover large number of people ~ coming down the tunnel.

12/21/2007 05:29 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

Rosemary I just noticed your little meez thingie. Sexy:)

12/21/2007 05:37 PM

by Bryant Tutas-Tutas Towne Realty, Inc

Bryant ~ I know um? Well she keeps in shape because she is always moving and snapping. wink wink

12/21/2007 07:00 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

Rosemary

I agree with you. There are laws that do make sense.

I wasgoing to ask you. I notice you are really upon a lot of newer laws. I do a lot od Commercial and Investment Real Estate.

A couple of days ago I was talking to a woman that said she was going into foreclosure and was wondering if I could point her in the right direction to get some help from the Government in means of the publication or help to avoid foreclosure, and any information on any bailout program.

I really have not been on top of this as others have.

Any direction I could give her to get her pointed in the right direction Rosemary.

She is a nice lady, and a victum of the times.

I really appreciate it Rosemary

Your friend from Wisconsin

Tom Braatz

12/22/2007 10:51 AM

by Tom Braatz, South Eastern Wisconsin (Tom Braatz)

Tom, Since the foreclosure laws are so different than California, I just did a search to find some information on foreclosure procedures for Wisconsin. In California we have a non-judical foreclosure procedure and in Wisconsin you are under the judical foreclosure so it takes longer to foreclosure on a homeowner. The key is knowing the process ......Here is what I found:

How are Wisconsin mortgages foreclosed? In Wisconsin, thelenders generally go to court in what is known as ajudicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed inCircuit Court along with what is known alis pendens. Alis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

How long does it take to foreclose a property in Wisconsin? Depending on the court schedule, it usually takes approximately 365 days to effectuate an uncontested foreclosure, unless the lender waives the right to deficiency because no sale can occur earlier than twelve (12) months unless this waiver is granted. If there is a waiver, the sale date must wait until six (6) months after a judgment, unless the property is abandoned at which the period of two (2) months must elapse. This process may de delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files forbankruptcy.

Other notice requirements in Wisconsin include: Notice of the sheriffs sale must be published for six (6) weeks prior to the actual sale date, and notice of the sale must be posted at the real estate to be sold or at three public places in the town in which the property is to be sold for at least three (3) weeks prior to the sale date.

I would tell her the process so that she know what the Wisconsin foreclosure timeline is. Sounds like you get more time than we do here in California.

Then I'd advice her to contact her lender, contact her lender..... and see if there are any options that they offer to homeowners assistance that will help her.

And I would also point towards the HUD counseling that is offered for free, I believe. They will give her more agencies and other helpful information on what options she may or may not have.

The two plans that the government have approved (that I know of) might not fit her because it sounds like she is not current with her mortgage. However, depending on her situation she may be able to catch it up and then qualify for assistance through one of the plans. I just don't know enough about her situation to figure that out and I am not the expert in these new plans to figure that out. The loan officer/mortgage professional would be the best to advise her on this.

There is always short sale but it doesn't sound like she wants to lose her home. Point her in the direction of HUD assistance and keep in touch with her to make sure she follow up and get some kind of information on how to avoid foreclosure.

Hope this helps.

12/22/2007 02:24 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)