The Brown Team – Downing-Frye Realty
RICK BROWN: (239) 322-2313
BRENDA BOOTH: (239) 287-8834
Bill could help short sale sellers in 2013
By U.S. law, a homeowner with an underwater mortgage who goes through a short sale has part of his or her debt forgiven by a bank. This amount is considered income by law. It is like the lender gave the owner money.
Since this money is considered income, it is taxable by the IRS come tax time. Right now, a temporary law effective through Dec. 31, 2012 has made the debt forgiveness tax-free. A short sale in 2012 allows a homeowner to walk away free of debt.
The rule is set to expire next year but there is talk that it will extend that rule past Dec. 31 if approved by both the House and Senate and signed by President Obama.
“It is bad enough that so many families are faced with mortgages that now exceed the value of their home,” says Stabenow. “But to add insult to injury, without this bill, the IRS would once again require these families to pay hundreds or thousands of dollars in additional income tax when they sell or refinance their home. That’s just wrong.”
Read more at: Real Estate News