Mortgage Debt Forgiveness Act Expiring – 2012 is the Year for Short Sales

It’s big news for homeowners everywhere who are struggling to meet their mortgage payments: the Mortgage Debt Forgiveness Act is set to expire on December 31st, 2012, making this year the year to do a short sale.

If you’re considering a short sale (which is a far better alternative to foreclosure), now is the time to take action. Once the Mortgage Debt Forgiveness Act expires, and you decide to do a short sale, you may end up paying thousands more in taxes.

The Mortgage Debt Forgiveness Act was designed to give relief to homeowners forced to sell their homes in a short sale.

Prior to 2007, homeowners were responsible for paying income tax on the debt forgiven through the short sale of their primary residence. That is, if you owed $600,000 on your home, but sold it in a short sale for $500,000, you would be responsible for paying income tax on the $100,000 of debt forgiven by your bank. The Mortgage Debt Forgiveness Act, valid from 2007 through 2012, offers relief to homeowners by stating that they are NOT responsible for taxes on debt that is forgiven by the lender.

However, the Debt Forgiveness Act is set to expire at the end of 2012, and it has not yet been decided whether it will be extended.

If you are having difficulty meeting your mortgage payments, or are facing possible foreclosure, we would be glad to consult with you about the possibility of putting your home up for a short sale in 2012. We have earned the nationally recognized Short Sales and Foreclosure Resource Certification (SFR), and can walk you through the often difficult and complicated procedure of a short sale.

Markus Brown, BA, SFR
714.299.3400
markus.brown@yahoo.com

Heidi Brown, MBA, SFR
949.280.2912
heidi.brown@yahoo.com