Great News for Charlottesville Short Sale Sellers
Mortgage Debt Relief Act Extended Through 2014!
The Mortgage Forgiveness Debt Relief Act of 2007 was created in the aftermath of the housing crash. It allows certain taxpayers to exclude income from the discharge of debt on their primary residence. This includes debt that has been reduced through the restructuring of a mortgage as well as mortgage debt forgiven in connection with a short sale, deed-in-lieu of foreclosure or foreclosure. Prior to the creation of the exemption, if a lender agreed to allow a homeowner with a $300,000 mortgage balance to sell their home for $200,000, the homeowner would have received a 1099 for $100,000 in forgiven mortgage debt and expected to claim it as income by the IRS.
What Does This Mean For Charlottesville Short Sales That Have Already Closed?
The one year retroactive extension covers ALL 2014 deals! If you closed a short sale transaction in 2014, the Mortgage Debt Relief Act Extension offers certain short sale sellers the ability to avoid having to claim the forgiven mortgage debt as income.
What About Sellers Who Short Sale in 2015 & Beyond?
Unfortunately, this extension only applies to short sale transactions that successfully closed in 2014. Many of the lawmakers who voted to pass the bill agreed that while extending the tax break another year is a step in the right direction, a more permanent solution is needed. Hopefully, that means a more permanent solution will come to pass for short sale sellers in 2015 and beyond once lawmakers return in January.
More information on the Mortgage Forgiveness Debt Relief Act can be found here:
Do you need to sell your home as a short sale in Charlottesville, Albemarle, Greene, Fluvanna or Louisa? Contact us for a FREE, no obligation, confidential consultation to evaluate your options. Don’t wait, get the help you need before it’s too late!
Copyright © 2014 by Allegra Williams
Mortgage Forgiveness Debt Relief Act Extended Through 2014!