Many people think that if Congress doesn’t extend the Mortgage Debt Forgiveness Act, which expires on Dec. 31, and they don’t conclude their short sale by then, they will face serious tax consequences since the IRS will treat unpaid mortgage debt as taxable income for many borrowers.
As such, real estate agents are “encouraging people to sell before the tax break ends,” says Daren Blomquist, vice president of RealtyTrac. “ If that law expires, home owners who agree to short sales could see their income tax jump significantly because the portion of unpaid loan balance not covered by the short-sale proceeds will be considered taxable income in many cases.”
In the rush to get it done this year short sales from borrowers behind on their payments jumped 22 percent over last year for the three months ending Sept. 30, RealtyTrac reports.
However, these stories of doom and gloom don’t explain the whole picture for homeowners in California. There are other options that can be used to avoid your own personal fiscal cliff. You should talk to an attorney who is experienced in this area and also talk to a tax professional. Do NOT talk to a real estate agent about your legal concerns.
I personally have helped many people who had been given bad legal advice by a real estate agent. When facing such serious legal issues your first call should be an attorney.
If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 877.442.4577 or send me an email at firstname.lastname@example.org or just visit my website www.upsidedownca.com.
California Attorney and
licensed Real Estate Broker