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Since 2007 the Mortgage Debt Relief Act has helped countless homeowners impacted by our housing market crash, allowing them to waive the normal taxation associated from short sale debt write-offs. With the improving marketplace during the past 18 months underwater mortgages were once again threatened with taxation after debate ensued whether the Act would be extended on December 31, 2013.
December 2013 came and went but recently the government announced the program will be retroactively extended once again and sellers can breathe a collective sigh of relief! The State of California Tax Board has also decided to follow suit despite legislation that has been stalled on the state level that would accomplish the same extension.
How Would Sellers Be Impacted If Extension Were Not Granted?
The most significant impact that sellers would feel if the extension not be granted would be a large tax implication on money they would not ever physically receive. Because a short sale occurs when a property is worth less than what is owed on it, in most cases a seller agrees to relinquish all proceeds of the sale to the lender. Without the Mortgage Debt Relief Act, homeowners would be taxed on sale proceeds received regardless of the fact that they never really see the money.
What Can Short Sale Sellers Expect Moving Forward?
With this update, affected sellers can expect to leverage the money saved to move ahead and utilize it toward future financial stability. In fact, banks are now lending again to borrowers with a short sale history quicker than those who have foreclosed on a property.
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Not all real estate agents are qualified or certified in managing short sale or foreclosure properties so If you or someone you know needs that fresh start, we encourage you to contact us today! We look forward to assessing how best we can serve you!
Call Melinda Elmer and her team: 562-316-2915
Call Mike Hernandez of Trilogy Financial Services: 949-221-8105 x 2157
