Kris says, “depending upon the tax brackets the homeowner is in, this could mean $50,000, or $100,000 dollars in taxes that will be due."
Blaine, MN. (PRWEB) August 10, 2012
Kris Lindahl explains the “2007 Mortgage Debt Relief Act” forgives the debtor the amount between what is owed on the mortgage, and the amount collected from the short sale of the home. For example,” Kris Lindahl adds, “if the mortgage is $300,000, the home short sale amount collected by the bank is $200,000, and the bank waives the difference of $100,000 that was not collected, that $100,000 is considered taxable income for the homeowner, which will greatly increase the amount of taxes they owe. The 2007 Mortgage Debt Relief Act provides an exemption for the $100,000 as taxable income for the homeowner.”
“The 2007 Mortgage Debt Relief Act is set to expire at the end of 2012, so many people are scrambling to hurry and get their short sales in before it expires,” Kris Lindahl says, and adds “in other words with 2007 Mortgage Debt Relief Act allows an exemption so taxes will not be owed on the deficit.”
The hot topic right now is whether congress will approve and extend the 2007 Mortgage Debt Relief Act to 2014, or 2015 before the end of the year. Kris Lindahl says, “it will be interesting to see what happens, because there have already been a few bills that have been turned them down this year which included an extension for the 2007 Mortgage Debt Relief Act.”
One attempt was presented by Democratic Senator Debbie Stabenow of Michigan who proposed to extend the bill through 2013. Another attempt was made with a house bill sponsored by Republican Tom Reed of New York, who also wanted to extend it for 1 year. The third attempt was by Democratic Representative Charles Rangel of New York proposed a 2 year extension.
Kris Lindahl feels it will get extended, but does not know if it will happen in an election year. Kris Lindahl explains that, “the biggest concern is that it is an election year, and does not know if either side will take a stance, or not.”
“If they do not extend the 2007 Mortgage Debt Relief Act,” Kris Lindahl explains, “the losses for homeowners will be substantial. In some cases, this will add a couple $100,000 in extra income for homeowners to report on their taxes.”
Kris says, “depending upon the tax brackets the homeowner is in, this could mean $50,000, or $100,000 dollars in taxes that will be due. Even lower tax bracket homeowners could owe $15,000, or $20,000 in additional taxes, depending upon the amount of debt that is forgiven by the bank.”
“Congress is receiving pressure from the National Association of Realtors, attorneys, accountants, and homeowners, which are all placing pressure on Congress to get this Mortgage Debt Relief Act extended as soon as possible,” Kris Lindahl, the number 1 Edina Minnesota and Wisconsin short sale agent explains.
At the beginning of the year Kris felt the debt relief act would be extended for sure, “now that we are in mid August, and it still has not been extended, with it being an election year, it could be put off longer,” explains Kris Lindahl.
Kris Lindahl says, “nothing is for certain, as to whether it will get extended this year, but if you are a homeowner this deadline may affect whether you should short sale your home now or not.”