Great News for us Short Sale Folks! Many of you may have heard, but for those who haven't this is an important piece of what we do. 

 Our Short Sale clients will not have to pay "Income Taxes" for the amount of the short sale forgiven by the Lender!

I can't tell you how many clients have paused or even rejected doing a short sale due to the possibility  of having to pay taxes for the remaining amount not forgiven by their lender.

Personally, I've always thought that it was the lesser of two evils. I've had many lenders say their banks would 1099 the clients for the same amount when it sold as a REO. If that is true they were going to get the hit anyways. Not only that, but i'd think that if faced with 2 possibilities:

1. Have the home foreclosed and suffer Credit disaster!

2. Have a successful short sale and pay a relative small penalty?

At any rate, Relief applies to debts forgiven between Jan. 1, 2007 and Dec. 31, 2009

• No income limitation
• No more than $2 Million
• Only for Principal residence
• Not available for Cash out situations
• Refi's do qualify (so long as the debt does not exceed the original amount of the debt
• Home Equity debt (or second mortgages) qualifies if the funds were used to improve the home

Like so many Government programs this has many limitations, however every little bit helps and I hope this bit of Information helps someone out there in AR Land!

H.R. 3648-Public Law 110-142

Signed Dec. 20, 2007