The Mortgage Debt Relief Act has been a godsend for many homeowners that lost their home to a foreclosure or sold through a short sale by relieving the burden of having to pay taxes to the IRS on the balance of the loan that may have been forgiven.
But that appears to be changing.
Last year the Act was extended for a second time since it was passed in 2007 as part of the Debt Ceiling negotiations. That extension is set to run out on December 31, 2013. You can learn more about the Act by clicking here.
There are several Bills being worked on now to address another extension but currently there has not been much chatter about them and the signs do not look very encouraging.
If I was a betting man (Ok I love to play poker and Blackjack) I would say it is 50/50 at best currently. Much of the debate these days (as we are all quite aware of) is centered on Obama Care and not much has been said about this more pressing issue.
At my real estate brokerage – Terra Firma Realty Group – we have successfully helped many people in Stuart, FL; Jensen Beach, FL; Port St. Lucie, FL and Palm City, FL avoid foreclosure by doing short sales on their single family homes, town homes and condos. Many of those were forgiven of the remaining debt and all of them beyond the investors or second home owners were able to benefit from the relief the Mortgage Debt Relief Act offers. Without it I am afraid that it would have created another problem for these people – owing money to the IRS – in a time when they need to be able to move on and start over.
Even though it is the middle of November and we are nearing the end of the year you may still be able to list and short sell your home in time to avoid the possible tax consequences that could arise if the Mortgage Debt Relief Act is not extended in 2014.
So what happens if you don't sell in 2013 and the Act is not extended? Should you still short sale or just let it go? Check out my new video that discusses this here.
Of course no matter what you do, be sure to consult your tax adviser or attorney to discuss your particular situation. If you need to contact me or my team you may do so at jeff@TFRealtygroup.com or visit our website at www.TFRealtyGroup.com.
To learn more about how a short sale could be best for you please click here.