Short Sale Tax Savings Ends In 90 Days
If you have been thinking about taking advantage of the short sale tax savings, you had better act fast.
There are only 90 days until the Mortgage Forgiveness Debt Relief Act and Debt Cancellation of 2007 expires (12/31/2012), then this short sale tax write-off potentially goes away forever.
Short Sale Tax Savings Could Be Large
Long-time reader "Steve" wrote in the other day asking:
Not sure what tax year this will take effect, but if the tax cut isn’t extended for Fiscal year 2013, then everyone on the fence about whether to do a short sale needs to strongly consider doing it NOW. Their indecision could cost them a tax break, right? - Steve
The answer is "most likely" Steve.
The government could always extend the program, and experts believe there is a better than even chance it will be extended. But what if it isn't?
Well, if they don't extend the short sale tax savings, then homeowners who sell short better plan on spending some more money.
But what exactly is a short sale tax savings?
Take Advantage Of Short Sale Tax Savings
When somebody short-sells their home, they end up selling the house for less than the debts that are recorded against the home. They have to get the bank to agree to a deal that lets them sell the house, even though they've come-up short with paying off the mortgages.
When a bank agrees to forgive a portion of the debt, this becomes a taxable event. But the aforementioned debt relief act allows homeowners to not pay taxes on this forgiven debt ... until the end of 2012.
By way of example, let's say somebody has to sell a home in Tallahassee, and it is short $60,000 (not uncommon these days). Instead of receiving a capital gain (IRS Form 1099-C) of $60,000 and owing taxes on it, the homeowner can simply walk away. This is why we call it a short sale tax savings, and it's coming to an end in 90 days!
It might not be too late if you act fast, and you could have your home on the market in less than 24 hours and under contract in less than 7 days! If you want to know how, just drop me a note and I will show you how to take advantage of the short sale tax savings that are still good through the end of 2012.