The biggest concern of many upside-down Sacramento sellers is whether they will owe taxes to the state of California on a short sale. It matters not whether the home goes all the way through foreclosure, reverting to the bank, or whether the seller elects to do a short sale, mortgage debt relief may trigger a state tax bill.
Some sellers have enough losses to offset the tax consequences, and some sellers qualify for insolvency, which can make them exempt from paying taxes. There are other exclusions. My advice is always the same: talk to a tax accountant, preferably a certified public accountant (CPA), because I am not licensed to give tax advice.
The tax liability from a short sale is the main reason short sellers want to get the highest price possible for their home, and it's the reason they want me to push for multiple offers and to continue sending offers to the bank even after seller's acceptance. Contrary to popular belief, continuing to send offers to the bank does not delay the short sale, unless, of course, the bank is Countrywide (and a handful of others).
I get short sale approval typically within 6 to 8 weeks, regardless of how many offers the bank receives. My job is not to dump the home in the lap of the first buyer who comes along. My job is to get the seller as much as possible, which may lessen the sellers' tax liability. Not every Sacramento short sale agent shares this sentiment.
If you're contemplating a short sale in Sacramento, you may want to follow Senate Bill 97 in the legislature. It was introduced January 26, 2009, by Senator Calderon, to amend Section 17144.5 of the California Revenue and Taxation Code. Senate Bill 97 is an attempt to conform to the federal Mortgage Forgiveness Debt Relief Act of 2007, which excludes mortgage debt forgiveness taxation on a personal residence. The bill extends those provisions from January 1, 2007 to January 1, 2010.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
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If you're looking for an experienced short sale agent in Sacramento, call Elizabeth Weintraub at 916.233.6759.
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