Follow on Google News News By Tag Industry News News By Location Country(s) Industry News
Follow on Google News | Fiscal Cliff Deal Extends Protections for HomeownersHome owners may find relief in the continuation of measures that could work to reduce their tax liability this year. Arizona's non-recourse law and the fiscal cliff deal provide many homeowners protection and an exemption from a tax liability.
By: Strawberry Media Anti-deficiency protection can (but does not always) apply to second mortgages, does not apply to equity lines of credit, nor does it apply to some refinanced loans. In addition, there are limits to the types of properties that qualify for anti-deficiency protection. Unbelievably, losing the residence itself may not be the hardest hit for these distressed homeowners, because cancellation of debt comes with another cost -- that of a potentially devastating tax liability. If a lender cancels debt, the lender is then obliged to send the borrower (and the IRS) form 1099-C: Cancellation of Debt. Unless an exception is met, this discharged debt is now considered taxable income. Arizona's non-recourse law, the Mortgage Debt Relief Act and IRS Code offer pathways for exceptions. The non-recourse law side-steps the cancellation of debt, while the Mortgage Debt Relief Act and IRS Code may exempt some homeowners from tax a liability resulting from the cancellation of debt. Application of these varied provisions is complex. From the type of property to the specifics of the loan, there are qualifiers that must be met before homeowners can benefit. But, how do you know where you stand? What should you do if you get a 1099-C or otherwise face a deficiency? It's a pertinent question with the 2013 tax season looming. Joy Partridge, CEO at Accounting World CPA & Consulting, PLC (http://accountingworldcpas.com) said, "homeowners facing deficiency should consult a tax professional skilled in dealing with foreclosures and short sales, to accurately determine if there is any additional tax liability in their specific situation." Because the potential liability can be crushing, it's too important to leave to chance. End
Account Email Address Account Phone Number Disclaimer Report Abuse
|
|