Not Reading This Could Literally Cost You Tens of Thousands of Dollars!
Unless you’ve been asleep for the last 5 years, then you know that home values have dropped unlike any other time in our lifetimes. Here in Salt Lake City, homes have dropped 30.5% since April of 2006 according to CoreLogic.
No one could have predicted that home values were going to drop so rapidly and so much. If you’ve found yourself owing more than your home is worth, please don’t blame yourself or think that you could have prevented it.
The fact is that thousands of homeowners here in Salt Lake County are in the exact same boat. In fact, anyone who bought a home with near 100% financing as early as 2004 may still owe more than their home is worth.
But that’s not the bad news.
This Act waived the tax liability that previously came with the forgiveness of debt that happens when a bank forecloses or a homeowner short sales their home and the amount owed is greater than what the home sells for.
The difference between these two numbers is considered forgiven debt and reported as income to the homeowner by the bank to the IRS.
Before the Mortgage Forgiveness Debt Relief Act, losing your home wasn't the biggest pain you'd feel. You might also have to pay taxes on the forgiven debt as though it were income!
This is the BAD NEWS...
The Act is set to expi re December 31st 2012. And since we’re in an election year, all bets are off. I won’t even attempt to predict which way it will go, but I will say this:
If I were facing foreclosure or if I owed more than my home is worth, I’d want to explore my options ASAP for two very important reasons.
1. I want to resolve the forgiven debt situation before the end of this year so I KNOW what my tax bill will be (before the end of the year it’s GUARANTEED to be zero**).
2. I understand supply and demand. The closer we get to the end of the year, the more the media will talk about the looming tax bill for homeowners and people will be frantically looking for help to avoid these taxes. The last thing anyone wants is to owe the IRS taxes. The well informed will have explored their options and put in motion solid plans.
I’ve helped hundreds of homeowners over the past 5 years strategically avoid foreclosure. I’ve also helped a few who have waited until the last minute, but honestly, the longer a homeowner waits to get help, the fewer options they have & the more difficult recovery can be.
If you or someone you care about owes more than their home is worth, even if they are in the process of working out a loan mod, or plan to stick it out, just to be safe, they should give me a call at (801)755-8899 and evaluate their options.
Sincerely,
No comments:
Post a Comment