Welcome to San Diego Blog | March 23, 2013
Short Sales Extension-Mortgage Debt Relief Act 2013
The Mortgage Debt Relief Act has been extended through the end of 2013. This important legislation allows distressed homeowners in default or “underwater” to pursue short sales as a solution without having to worry about tax liabilities. The debt forgiveness act provides sellers a financial break on federal income taxes after completing a short sale of their property by way of not being taxed the difference between the amount for which the property sold in the short sale, and what they owe on their mortgage. The extension provides additional time to sell short, consequently relieving homeowners of a heavy mortgage, and/or possibly placing them in a better position regarding future taxes.
Short Sales vs Foreclosures
There is no question that short sales are much more favorable to one’s credit than foreclosures. It can be two or three years after a short sale one can rejoin the housing market, versus seven years after a foreclosure. Foreclosures are more time-consuming too. Short sales can take approximately 90-120 days whereas foreclosures can go on for a year, sometimes longer. In 2012, our team’s success ratio while working with short sales was 100%. In addition, our services assist with delaying any foreclosure proceedings during the process.
Note, the California exemption expired at the end of 2012, and has not yet been extended, which means mortgage debt is considered taxable state income, for now. This may change as the National Association of Realtors lobbies for its extension. We’ll know more soon.
Please give us a call if you’d like to discuss your particular situation, and if we can help… (619) 246-8400.