Short Sale Mortgage Debt Exemption about to Expire

By Adrienne Francis

Currently, any mortgage debt that is forgiven by a lender in a short sale, loan modification or foreclosure is exempt from federal taxation. This will change on Jan. 1, when this exemption expires.

Borrowers will then have to include the amount of their mortgage relief from lenders as income celebrity porn on their federal tax returns. An example would be: A borrower would have to pay taxes on a $100,000 reduction in principal which he owes on a loan, or a $20,000 write-off would be owed after a short sale.

The bill is called the Mortgage Forgiveness Debt Relief Act of 2007 – and we need an extension. But considering Congress has serious fiscal issues now- there is no guarantee the extension of the bill will make it through congress

The Debt Relief Act  mobile porn applies only to canceled mortgage debt on a primary residence, not a second home and the maximum exemption is $2 million.

According to calculations from the Realtor’s Association, in 2011, it was estimated that the tax savings to borrowers from this was at least $1 billion. Pretty steep, right?

With a huge backlog of foreclosures, borrowers in New York and New Jersey would feel considerable pain if the tax exemption expires. The foreclosure process in these states is longer than in any other, according to Realty Trac. (what a surprise?) New York has the longest timeline — 1,072 days as of the third quarter, compared with the national average of 382.

 

If I can help you with any additional information regarding this article, or with any of your home buying or selling needs or if you know someone who would like some assistance, please feel free to visit my website to learn more about me www.AdrienneFrancis.com or text or call me at (201) 259-4449 .

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