For the past several years, readers would routinely ask me if the short sale tax forgiveness will be extended, so I'm happy to say ...
Santa Claus came early last month.
On the last Friday before Christmas, the President signed into law the Mortgage Relief Assistance Act as part of the $600B spending bill that passed in the House of Representatives and the Senate.
And this extension is different from the last ones.
This time, it was not only retroactively extended to address all 2015 short sales and foreclosures, this version of the mortgage debt forgiveness extension is proactive as well, addressing distressed home sales through all of 2016.
For the first time since 2012, people can make the decision to do a short sale with the knowledge that they will not be taxed for the amount of mortgage debt that is forgiven by their lender(s).
Why Some Sellers Should Consider A Short Sale
First of all, if you are happy in your house and do not need to move, this really isn't for you. Home values are on the mend for most areas and most price ranges, so enjoy your house and you will likely be growing positive equity in your house over the next few years.
But if you are trapped in your house and do not know what to do, a short sale is definitely something you should investigate. First and foremost, you can move on with your life without picking up a hefty tax bill from Uncle Sam. But there is also the benefit of the reduced impact on your credit score and your ability to borrow money in the future.
While credit rules continue to change and evolve, it is evident that the reporting agencies and lenders consider a foreclosure far worse than they do a short sale. The impact of the former versus that of the latter is a difference in your scores as well as a difference in the amount of time they will continue to impact your credit.
Choosing to do a short sale in Tallahassee is by-far the better solution for people who plan on borrowing money (for anything) in the future.
If you would like to know more about your options for selling your house, download the free resource "Should I Short Sale My Home" by following the link.
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