The Mortgage Forgiveness Debt Relief Act does not automatically release you from your mortgage debt after a short sale.
So, what does this law cover? What does it do? I'll answer that question today.
Unfortunately, the law does not automatically release you from your upside down
mortgage debt after a short sale. What it does do is give certain homeowners
relief from taxes after a short sale.
Let's look at the tax liability for a homeowner who short sold their home or
lost it to foreclosure. Before this law was enacted, they would be taxed for
any debt that was forgiven.
Let's say that someone owed $400,000 on their home and sold it as a short sale
for $300,000. According to Uncle Sam, if the lender forgave $100,000 in debt,
then it was like they received $100,000 in free money.
Uncle Sam considered that forgiven debt as income. He wants that person to pay
taxes on the income. Imagine the shock of receiving a big tax bill after you
lost your home to foreclosure!
The Mortgage Forgiveness Debt Relief Act of 2007 changed all that. Someone can
now short sale their home and be relieved from owing income taxes on up to $2
million in forgiven mortgage debt on their primary residence.
The law expires at the end of 2012. If you are thinking about short selling
your home, then you need to get started right away.
If you have any quesions about a Short Sale, Please feel free to contact me by email at firstname.lastname@example.org or, if you prefer, you can call me at 770-875-4268.
Thanks for reading this, Bion Grady.
Bion is a Real Estate Agent at Maximum One Realty Greater Atlanta.
Bion Grady specializes in loan modification assistance and short sales in
Georgia. Loan Modification Help, Short Sales. Short Sale Realtor.
Copyright 2012 SFI Marketing Institute, LLC. All Rights Reserved.
Bion Grady, Maximum One Realty Greater Atlanta, and the Stop Foreclosure
Institute are not affiliated in any way, shape, or form with the government.
Our services have not been reviewed or endorse by the government or your lender. Most lenders willingly work with agents on short sales.
This is not intended as legal, technical, or tax advice. Please speak with a
licensed professional before making any decision. Information is deemed
reliable but not guaranteed as of the date of writing.
The views expressed here are Bion's personal views and do not reflect the views
of Maximum One Realty Greater Atlanta.