MORTGAGE FORGIVENESS DEBT RELIEF ACT EXTENDED
In 2007, George W. Bush signed into effect the Mortgage Forgiveness Debt Relief Act. President Obama extended it and it was set to expire December 31st, 2012.
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.
Congress passed a bill to avert the fiscal cliff and it will become law when President Obama signs it. Included in the fiscal cliff deal is an extension of the Act for one more year.
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!
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 2013 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 over a hundred 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,
Julie Larson
Realtor Utah
801-755-8899
Search for Homes Here
callteamlarson@gmail.com
Realtor Utah
801-755-8899
Search for Homes Here
callteamlarson@gmail.com
**If you are covered by the MFDRA.
