The Mortgage Debt Forgiveness Tax Relief Act Review. Will you owe Uncle Sam if you Short Sale Next Year?
Why is there panic in the market to Short Sale Homes by the end of the year?
The Mortgage Debt Relief Act passed in 2007 was placed into effect until Dec 2012.
Under this Mortgage Debt Forgiveness Tax Relief Act Review, if there was a foreclosure or a short sale, the IRS could not collect taxes on the forgiven amount. There is a $2,000,000 limit on the forgiveness for married, $1,000,000 for single. This is a free pass, but it does not always apply to second mortgages or Jr. liens. Those of you thinking you were getting a free pass on this, expect some lawsuits to pop up soon.
There is however federal relief being offered for that right now and many debts are already being cleared off before the end of the year for Jr liens to help offset these losses with the banks. However that too is ending at the end of the year as relief is shifting to those banks who are cooperating in loan restructures.
Not to fret, The Mortgage Debt Forgiveness Tax Relief Act Review is still on the table for an extension.
NAR – National Association of Realtors, NACA and several heavy lobbyist are in favor of an extension to the act, HOWEVER… it is an election year so focus is not 100% on this issue, but it will be addressed as an extension is being pushed through congress. It just has not hit yet, and may not in time should a short sale seep through in January, however I believe they will be making it retroactive.
But it is not just the Mortgage Debt Forgiveness Tax Relief Act Review that is on the table.
There are several laws being pushed through after the first of the year, one of which is the one I mentioned before where they will no longer be offsetting the federal relief to the banks on the difference lost under a short sale. Banks are creating false panics because they want to force a settle out for federal relief funds while they are still available to them.
Many are asking what can we do to avoid this?
The Mortgage Debt Forgiveness Tax Relief Act Review is on the minds of many homeowners right now. Especially coming into an election year where the focus of most lobbyists are on who is the best positioned candidate for the presidency. The review itself is falling by the weigh side and activists are pushing to get focus back to the issue.
Bottom line. Mortgage Debt Forgiveness Tax Relief Act Review has much support to extend the relief to the homeowners who are forced to short sell their home. If you are in this situation and you want to have a silver bullet in your pocket, you can still file a bankruptcy before you complete a short sale on your property. If you can show the IRS you were insolvent prior to the sale (meaning you had more debts than assets, you could avoid the tax consequences as the debt would be federally discharged. Bankruptcy trumps everything.
If this is not something you can or want to consider, then Tort litigation under FTC is your better option. Go to WWW.betterquest.com and click on the FIGHT BACK button to learn more.