Gainesville Short Sales Update: If You Have A Short Sale Or Foreclosure, You May Owe Federal Income Taxes In 2013
Short Sale Agents in Gainesville Florida Update – Please let your clients know that if you have a short sale/foreclosure succeeding this year, you may owe income taxes in 2013.
Homeowners have until Dec. 31, 2012 to undergo a short sale or foreclosure without suffering tax consequences – only when the debt has been released by the lender. The rules will change on January 1, 2011. Federal income taxes will be imposed on the amount that the lender forgives in a foreclosure or short sale. Example, if a home has been sold at an amount which is short of the amount owed on the mortgage by $50,000; the homeowners will be charged federal income taxes on the $50,000. The homeowners under the 25 percent bracket would owe $12,500 and those under 15 percent tax section would owe $7,500.
It is necessary for the bank to officially sign off the loan in writing before Dec 31 or else, homeowners would be on the curve even when the home is sold. This law took effect five years ago when the housing market nationwide crashed.
According to the Internal Revenue Service, one of the provisions of Mortgage Debt Relief Act of 2007 is to allow taxpayers to exclude income from the discharge of debt on their principal residence. Qualifying for the relief are debts reduced through mortgage restructuring and mortgage debt forgiven in connection with a foreclosure. According also to IRS, debt that will be forgiven this year would reach up to $2 million – $1 million if married and filing separately.
Short Sale Agents in Gainesville Florida consider it a relief that homeowners declaring bankruptcy could be exempted from paying income taxes on any cancellation of debt income if the debt is forgiven in the bankruptcy even if the debtor is solvent. Homeowners may not be required to pay income taxes on any debt income cancellation if their debts go beyond the value of their properties.
Lenders have been exerting efforts to speed up the short sale process. But there are instances that short sales are disrupted. An instance would be when there is a disagreement with the terms and another is when the would-be buyer chicken out off the deal.
I am not an attorney and the statements above are not legal counsel. Please seek advice from your Attorney or CPA regarding taxes and the implications of your short sale.
Other Articles to Read:
Call Stephanie Anson today at 352-260-0153 for a confidential phone interview regarding your options.
Please seek legal advice. This information is for informational purposes only.
Contact Stephanie Anson, CLHMS, CDPE, SFR, Realtor®, Anson Properties LLC. Licensed Realtors® in Florida at 352-260-0153 to list your property for sale or to purchase a property in Gainesville, Archer, Alachua, High Springs, Waldo, Keystone Heights, Hawthorne, Melrose, Cross Creek, LaCrosse, Williston, Earlton, Ocala, Micanopy, Newberry, Kanapaha, Haile Plantation, Duck Pond and the rest of Alachua County Florida, Orange County Florida and Seminole County Florida. We are accepting referrals.