Mortgage Debt Forgiveness Tax Relief by U.S. Law Set to Expire at End of This Year 2012

 

U.S. law - Mortgage Forgiveness Debt Relief Act of 2007 - applies to debt forgiven in calendar years 2007 through 2012 - including possible debt forgiven through SHORT SALE process.

 

For purposes of income tax, this law allows for exclusion of income realized as a result of modification of the terms of a mortgage, or foreclosure, for those who qualify on their principal residence. 

Any person participating in a SHORT SALE and who wants to qualify under the Mortgage Forgiveness Debt Relief Act of 2007 will need to get that home sold and closed escrow before the end of this year 2012.

Some forgiven debt is taxable.  This U.S. law - Mortgage Forgiveness Debt Relief Act of 2007 - provided tax relief to some people who owned and lost their home in foreclosure or who participate in a SHORT SALE.  

When people qualify according to this Mortgage Forgiveness Debt relief act of 2007, the amount of debt to the lender that is forgiven in the short sale would not be taxable.
 
People who are on the fence about listing their homes for SHORT SALE need to get those on the market now and as soon as possible.  A home listed for SHORT SALE too late during this year of 2012 will probably not get successful conclusion by the end of 2012 (signed purchase contract, delivered, concluded with close of escrow by the end of the year).

It's important for any home owner/seller considering a SHORT SALE to list the property as early as possible — especially since the short sale approval and completion process can take anywhere from 4 weeks to 12 months.

 

There are significant restrictions to qualify for this income tax relief on debt forgiveness.  You must consult with an experienced income tax professional or attorney to learn whether you qualify for this income tax relief on possible short sale of your property. 

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CONTACT US for consultation about a short sale - listing and sale of your ORANGE COUNTY CA home and real estate.

Source of some information is Melissa Zavala - www.ShortSaleExpeditor.com.  This is for information only and not the providing of legal or tax services.  To find out about your own possible income tax situation and possible relief, you must consult with a tax attorney or experienced income tax professional.

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