Act Now! Only 6 months left to take advantage to the 2007 Mortgage Debt Relief Act!
Traditionally when you owe a debt to someone else and they cancel that debt, such as a credit card where you settle for less than the amount owed, the difference between the settled amount and what was originally due is considered taxable income. The 2007 Mortgage Debt Relief Act has allowed individuals to exclude this income for taxable purposes when the debt forgiven was in connection with mortgage restructuring or in connection with a foreclosure.
The Debt Release Act was implemented in 2007 and is scheduled to end in December 2012. What does this mean for you? Simply, if you have been avoiding modifying your high mortgage or applying for a short sale instead of a foreclosure, now is the time to do so.
How does this work? Well, lets sat that you owe $350,000 on your mortgage. You get approved for a short sale amount of $200,000. Under the 2007 Mortgage Debt Relief Act the bank and the IRS write off the difference of $150,000, it is forgiven. But, come 2013 that $150,000 is now considered taxable income and it will need to be claimed on your yearly taxes. Add $150,000 to your yearly income and you will be in a much higher tax bracket, thus causing the amount you owe to sky rocket. It is like a double edge sword. The debt was forgiven because of a financial hardship and now that hardship will include an income that one never really had in their hands, making the hardship even harder.
If you find yourself in this situation or know someone who is give us a call! Myself as well as all members of Exit SCV are always there to help!
Anna Rogers is a member of an award winning team at Exit Realty SCV, one of the areas fastest growing real estate firms in the Santa Clarita Valley. Working with both buyers and sellers in the Santa Clarita, San Fernando Valley’s and surrounding areas, I will work tirelessly to ensure all your real estate needs are met. I look forward to talking with you and helping your home buying and selling be a smooth transaction.
Anna Rogers
818.688.1882http://www.buyandsellscvhomes.com/
annarogersre@gmail.com
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