The Mortgage Forgiveness Debt Relief Act was extended through 2013, giving underwater homeowners the opportunity to short-sale their home without federal taxation. Homeowners that owe more on their homes than what they are worth or that have been denied a loan modification should weigh their options on performing a short sale in 2013. A short-sale allows underwater homeowners a “reset button,” allowing them to sell their home without cost and have the amount owed forgiven.
Since the process can take several months, homeowners are wise to start the evaluation process early this year. The extension of the Forgiveness Act was boon, and there is no discussion of extending it another year. Most homeowners that started their short-sale later in the year in 2012 were not able to complete their sale by year's end. This year that would leave the owner with a potential tax bill to the federal government. Get your short-sale started before June to assure yourself ample time to complete the transaction.
The California Association of Realtors is sponsoring Senate Bill 30, that will push for an extension of the tax forgiveness at the state level to mirror the federal level extension. As of January 2013, those who did not complete their short-sale in 2012 will be taxed at the state level unless Senate Bill 30 passes. Owners considering a short-sale should consult a qualified tax professional for personal tax advice.
Since the process can take several months, homeowners are wise to start the evaluation process early this year. The extension of the Forgiveness Act was boon, and there is no discussion of extending it another year. Most homeowners that started their short-sale later in the year in 2012 were not able to complete their sale by year's end. This year that would leave the owner with a potential tax bill to the federal government. Get your short-sale started before June to assure yourself ample time to complete the transaction.
The California Association of Realtors is sponsoring Senate Bill 30, that will push for an extension of the tax forgiveness at the state level to mirror the federal level extension. As of January 2013, those who did not complete their short-sale in 2012 will be taxed at the state level unless Senate Bill 30 passes. Owners considering a short-sale should consult a qualified tax professional for personal tax advice.