Short Sales and Tax Bills

More people these days are going through short sales thanks to better procedures and less hold up, however many aren't aware that they might be facing a deadline. Unless things change and Congress extends the tax exemptions that were in place currently, underwater homeowner will owe taxes after their short sale goes through. The local Jacksonville movers learned that, presently, if someone owes debt on their primary home and it's forgiven through a short sale they won't have to pay federal income tax on it. But if that debt is forgiven after December 31, 2012, borrowers will owe income tax on that amount. The All My Sons of Jacksonville found out that the same rule in some states regarding homeowners going through foreclosures and principal reductions that are part of mortgage modifications. So for example, a $100,000 can add up to over $20,000.


In 2007, Congress passed the Mortgage Forgiveness Debt Relief Act, which temporarily exempted debt used to acquire and renovate a principal residence. The exemption doesn't apply to mortgage refinancing where cash is taken out and used for something other than buying, building or renovating a home. It doesn't apply to investment property. So if you're thinking of applying for a short sale, the local Jacksonville moving specialists suggest you try to beat the deadline.