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Good news for those Home Owners in Short Sale and Foreclosure some relief is in sight.
Im sure you could use a little good news about now. Many Short Sale and Foreclosed Homeowners probably arent even aware that you would have had to pay taxes on the difference between what you owed the Bank and what your house actually sold for, but you did. That amount was considered income, a 1099 would have been issued and you would have had to pay taxes on that amount.
The House of Representatives passed the Mortgage Forgiveness Debt Relief Act. Now, it still needs to be passed by the Senate and the President will need to sign it before it becomes Law but someone is FINALLY listening to the crash of the subprime Real Estate market that has emerged with all the Short Sales and Foreclosures.
I believe, if passed and signed, this tax relief will be retroactive.
Stayed tuned for more as it becomes available.
As it stands right now, those monies need to be made up somehow, so it seems unless changed, the vacation and 2nd home owners will be picking up the slack with new tax laws enacted. Again stay tuned.
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This is great news for those that have faced this problem… it is hard enough to be in this place – but then to be hit with the taxes is almost a double whammy – great job sharing this great information
Thesa, now all we need is for the Senate to pass it and Bush to sign it into Law.
I think this is a great bill and it really needs to pass. Why should the government pile on to someone’s misfortune. Working out a deal with the bank in a short sale situation should not be considered as an income source. This probably won’t be a problem for Bush to sign… I just hope it doesn’t get something weird attached to it in the Senate!
Great news for primary home owners in a short sale situation but not so good for second home owners! We will see what happens as it goes through the Senate and to the President’s desk.
Gena – We know someone will have to pay for the loss of taxes. It will be interesting to see the laws which change as we weed through the end of this down market.
~Paula
Hopefully this bill passes. We need all the help we can get to turn our economy around. If this bill doesn’t pass, these homeowners will not have money to put back into the economy.
Dylan,
It did pass but one of the things that most people don’t realize is that the State is not part of that bill. Those homeowners who have lost their homes may be issued a 1099 at the end of the year.
Also, some loans that are recourse loans may not be forgiven and the banks can go after the homeowner.
It’s a very good idea for anyone tangled up in this mess to seek the advice of an attorney.