Change is in the air!
2012 is an election year, and one of the biggest focuses of the numerous political debate is the state of our countries debt. The year-end congressional session will be chocked full of tax and budget issues, in attempts at debt relief. In roughly 10 months the Mortgage Forgiveness Debt Relief Act is set to expire and the buzz on the street is that Capitol Hill won’t be renewing it. In 2007 the law was put into place to allow homeowners to modify their loans in turn resulting with principle reductions on their mortgages, short sale or foreclose to prevent income taxation on the amount forgiven. It has been herd that the new conservative House members feel that the tax code “bailout” is unfair, that the government should not be aiding delinquent or underwater homeowners.
What does that mean? We’ll with the loss of tax help, a large numbers of distressed mortgage arrangements in the month ahead become endangered, which would inevitably lead to a great number of the loan modification participants to fall deep or deeper into a finical hole.
If a homeowner was to short sale or obtain loan modifications with debt forgiveness after December 31, 2012, one will run the risk of being taxed at the regular rates on the entire amount owed on ones home, instead of just the amount paid off. Basically “… what’s involved, and how it might affect someone contemplating a short sale or loan modification that involves debt forgiveness. Prior to 2007, all cancellations of debt by creditors were treated as taxable events under the federal tax code. If you owed $200,000, but paid off only $150,000 through an agreement with the lender, the $50,000 difference would be ordinary income, taxable at regular rates. Under the debt relief law for qualified homeowners, you can avoid taxation on forgiven mortgage amounts up to $2 million (married filing jointly) and $1 million for single filers. To be eligible, the debt must be canceled by a lender in connection with a mortgage restructuring, short sale, deed-in-lieu of foreclosure or foreclosure. The transaction must be completed no later than Dec. 31.” *
With this deadline looming, now would be the ideal time to contact an agent to talk about your options! Don’t wait, the results could be devastating!
For More Information:
Bradley Chais
Principal / Acquisition Specialist @ Team Chais
Phone: (813) 928-4308
Email: bradley@teamchais.com
* Harney, Kenneth R. The Tampa Bay Times (The Nation’s Housing: Tax break for mortgage relief may disappear) Feb 26, 2012
