What does this mean to homeowners? This means that you are going to be taxed on the “balance” of you home if you foreclose or short-sale. You will get to pay the government an earned income credit if you “lose” your home after 2012. So if you owe 200,000 and it sells at short sale or forecloses for $100,000 you get to pay the IRS taxes on $100,000……
According to the IRS, “the Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.” Translation: If a lender agrees to forgive a portion of a mortgage debt, either through a loan modification or a short sale, that amount would generally be considered taxable income. The Mortgage Debt Relief Act of 2007, however, allows consumers to exclude that “income” on a principal residence. The act is scheduled to sunset at the end of 2012—an important consideration for homeowners debating whether to short sale their homes in the next year or two.
If you know of ANYONE that MIGHT be in trouble on their home, they need to ACT TODAY! Call me at 480-275-9566 or email me at firstname.lastname@example.org or check out my website at www.sellingazwithrebecca.com