Currently, The Mortgage Debt Relief Act of 2007 expires December 31, 2012. This means that homeowners considering short sales in New Tampa, Wesley Chapel, and Tampa Bay, FL need to start the process now and close on the sale by December 31, 2012.
Tampa, FL (PRWEB) January 23, 2012
Veteran realtor and house short sales expert, Terry Burkot explains the vital reason why anyone considering short sales in New Tampa, Wesley Chapel, and Tampa Bay, FL, needs to start now. That reason, unknown by many home owners already frustrated and facing a short sale or foreclosure, is that the Mortgage Debt Relief Act of 2007 which was extended through 2012 currently ends this December 31st of this year.
A short sale, also known as “pre-foreclosure” allows the seller to sell a property even though the net proceeds are not enough to cover the principle balance on the mortgage. It can be a winning scenario for all parties involved: Buyers usually pay under market value for the house but should allow extra time for acceptance as banks may not move fast waiting for all offers and it may take extra time to close. The seller does well because they are able to rid themselves of a house that would have likely gone into foreclosure. The banks are in favor of it because they would rather sell a house and take a small loss now rather than the house go into foreclosure and take a big loss down the road.
On a campaign to educate homeowners and help them through this difficult and very detailed process Terry explains, “It works like this – lenders of house short sales, foreclosures or debt reconstruction are usually required to report the amount of the canceled debt to the person and the IRS on a Form 1099-C Cancellation of Debt and it is treated like income by the IRS. One then pays the taxes on that amount.”
Per this IRS link http://www.irs.gov/individuals/article/0,,id=179414,00.html, “The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure may qualify for the relief.”
A very simplified example is: “You borrow $100,000 and default on the loan after paying back $20,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $80,000, which generally is taxable income to you. If you qualify, the Mortgage Debt Relief Act of 2007 excludes this amount and tax is not owed on it.”
“Currently, The Mortgage Debt Relief Act of 2007 expires December 31, 2012. This means that homeowners considering short sales in New Tampa, Wesley Chapel, and Tampa Bay, FL need to start the process now and close on the sale by December 31, 2012 to take advantage of the debt forgiveness. If they wait until next year, they could face a large tax bill from the IRS,” says Burkot.
The short sale process is typically a lengthy emotional ordeal that can take many months to close making the 2012 deadline critical to starting the process now. Terry has streamlined the process and is effective at the closing short sales she lists.
About Terry Burkot, P.A.
Terry Burkot, P.A., entered the local real estate market in 2003 and is now with Future Home Realty in New Tampa, FL. When starting, Terry listed house short sales in New Tampa, Wesley Chapel, and Tampa Bay, FL in 2003. Terry quickly became a Short Sale specialist with the experience necessary to take a buyer and seller through the short sale process. Her motto is, “I don’t work from 9-5, I work from start to finish.” Highly involved in her community, she is an alumnus of the University of South Florida and a regular donor to local charities and church. For more information on short sales visit http://www.terryburkot.com or call (813) 363-8111.