Homeowners who are considering a short sale of their homes received a much-needed reprieve last week. As part of the American Taxpayer Relief Act of 2012 (fiscal cliff bill), Congress voted to extend the Mortgage Forgiveness Debt Relief Act until December 31, 2013. This means that debt forgiven under short sales or loan modifications will not be considered taxable income.
Without the extension, homeowners who earned income from a short sale of loan modification, people who are likely struggling to pay their mortgages would have to pay taxes on top of that. While this would create a difficult scenario for the homeowner, it can also be challenging for real estate market. Faced with the possibility of paying taxes on debt discharge income, homeowners may decide to walk away from the property and force banks to foreclose. Real estate experts expect an increase in short sales because of the extension. These short sales are expected to help the real estate market recover from the recent financial collapse.
If you are considering a short sale of your home, urgency is key. The average time for short sale is around three months. Stephen K. Hatchey, a Florida short sales attorney, can guide you through the process. To receive a free consultation of your case, contact our offices at 866-200-4646.