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 to get out from under the strain of a home mortgage due to hardship is a positive. Being exempt from any tax obligations is a bonus.

If you are a Central CT homeowner and are having a problem paying your mortgage, I may be able to help you. Call me for a confidential meeting to discuss your situation.

A Significant Short Sale Deadline Will End This Year

 

 

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Do you know somebody who is behind on their mortgage and doesn't know what to do? I may be able to help them, especially if they are facing foreclosure!

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Whether looking to buy or sell, we service the Greater Waterbury towns of Beacon Falls, Bethany, Cheshire, Naugatuck, Middlebury, Southington, Thomaston, Waterbury, Watertown and Wolcott 

Ed Silva  RE/MAX Professionals,  www.edwardsilva.com  203-206-0754

 
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17 Comments on A Significant Short Sale Deadline Will End This Year

JUL
17
881,844 Points 10 Featured Posts Attended Rain Camp Called Shot Master

Ed, let's hope this deadline gets extended for at least couple of years. (It's an Election Year, so...)
8:11pm • #1
594,206 Points 22 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Ed:  Very useful information, I'm suggesting and will re-blog later in the week.
8:13pm • #2
5 Featured Posts Outside Blog Attended Rain Camp

Ed, what are your thoughts on an extension of this relief? I've been doing pre-foreclosures long before there was a tax relief, but all the same it's easier with the relief.
8:14pm • #3
866,657 Points 18 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Ed ~  Very intersting -- just wondering ... do you have a reference for this legistlation and does it apply to all types of loans?   
8:17pm • #4
1,361,049 Points 244 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Ed, that is good motivation to act before the end of the year.  It would make since for Washington to extend this, but doing things in the homeowners interest does not seem to what Washington is about these days.
8:25pm • #5
586,663 Points 46 Featured Posts Outside Blog Called Shot Master

Thanks Ed, I was not aware of this.  With elections coming up I wonder if it will be changed before the December deadline???
9:16pm • #6
612,922 Points 40 Featured Posts Outside Blog Called Shot Master

Ed, here's hoping this much needed relief will be extended.  Personally, if I read of anyone not extending it, I will NOT be voting for that person in the election.  
9:18pm • #7
JUL
18
1,155,239 Points 86 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Praful, many a home owner has taken advantage of this. It's a bailout for the little man.

Jane, people need to allow enough time to get out of a bad situation.

Thomas, this relief will cost the Government a pittance against the trillions they gave the banks for getting us into this mess to begin with. I do hope it gets extended

Joan, yes, It's the Mortgage Forgiveness Debt Relief act

George, there are ample opportunities between now and the November elections for people to let themselves be heard

John, it would make great political sense for incumbents running for re-election to make noise about this before the Nov elections.

Juli, many others should have that same mindset
4:24am • #8
206,009 Points 14 Featured Posts Outside Blog Called Shot Master

Extending makes sense, many would benefit from it. I'm guessing it will but we still have a long long long way to go educating homeowners who are in default and waiting on loan mods, new laws..Short Sale is the way to go for those who are in default.
1:53pm • #10
234,939 Points 37 Featured Posts Outside Blog Called Shot Master

Hi Ed.  An important deadline to be conscious of.    Homeowners with short sale or foreclosure trouble should not be taxed on this phantom income.    People need this relief in order to get their financial house back together.  
5:55pm • #11
478,658 Points 15 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Ed -- I think it will get extended, but nothing is ever a sure thing with the govt. I will reblog in a few days. It's an important reminder and info most short sellers are not even aware of as I am sure you know.
6:41pm • #12
1,189,605 Points 32 Featured Posts Outside Blog Called Shot Master

Sounds like home owners better act fast if they want this tax benefit. December is fast approaching!
7:09pm • #13
504,851 Points 26 Featured Posts Outside Blog Called Shot Master

Ed, being an election year, I think this will get an extension. After everything people have been through, this is the least the govt can do.
8:04pm • #14
1,048,905 Points 397 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

My opinion is that it will be extended or replaced with something similar.

Be careful about telling homeowners they qualify for this. Many don't because they refinanced and pulled cash out to spend on other things.

Also, even if the debt relief act goes away many homeowners will still be able to avoid paying taxes on this "phantom income".  They may have to claim the income but also remember they have just taken a huge loss. 1-1 still equals 0

All short sellers need to seek competent tax advice. They may find that this is really a non issue.
8:38pm • #15
1,352,382 Points 42 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Ed - This is such an important deadline for distressed homeowners to understand and be aware of.
10:58pm • #16
JUL
19
466,370 Points 50 Featured Posts Called Shot Master

Ed, not much time left. I agree with Bryant comment #15, short sellers need to seek competent tax advice. 
12:12am • #17
1,521,143 Points 275 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Good morning, Ed.... if this benefit is not extended, foreclosures will skyrocket.... the mess will thicken....
5:34am • #18


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Ed Silva CDPE, GRI, ABR, Real Estate Agent

Waterbury, CT

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