IMPORTANT! THE MORTGAGE DEBT FORGIVENESS DEBT RELIEF ACT SUNSETS AT THE END OF THIS YEAR (2012)
If you or someone you know owes more on your/their primary residence mortgage than the home is worth, you should be aware that the law currently in effect that is very good for you financially EXPIRES IN A LITTLE MORE THAN SIX MONTHS from now.
As a general rule, the Internal Revenue Code treats the amount of canceled/forgiven debt as ordinary income to the taxpayer. Congress, however, enacted The Mortgage Debt Relief Act of 2007 which generally allows a home owner to exclude as income a cancellation/forgiveness of debt on their primary residence. Up to $2MM of such debt may be eligible for this exclusion.
As we know from experience, depending on the facts and circumstances surrounding a short sale, they can take quite a while to market, sell, negotiate and close.
Also, it is very important to understand that the BANKRUPTCY laws DO NOT generally EXTINGUISH obligations the debtor/taxpayer owes to the IRS.
Thus, if you or someone you know has been considering a short sale, NOW IS THE TIME to start the short sale process thereby saving you as much as 10’s of thousands of dollars!
LEGAL – THIS POST IS NOT INTENDED TO BE NOR SHALL IT BE DEEMED TAX ADVICE – I am a real estate and business lawyer that handles short sales, loss mitigation, asset protection, foreclosure defense and other work-out solutions as well as many other matters related to real estate, business and other areas of the law. I AM NOT A TAX LAWYER, CPA, or ACCOUNTANT. As such, you should always consult with a CPA when seeking advice on tax matters.
Michael D. Wyckoff, Attorney, Sarasota, Florida
Wyckoff Law Firm, P.A.
941-795-6565
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