The Time to Short Sale is Now!

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation are due to expire on December 31, 2012.  The act allows taxpayers to exclude income from the discharge of debt on their principal residence whether as a short sale or foreclosure as well as the amount of any debt reduction due to mortgage restructuring.  Once the act expires homeowners who short sale or foreclose will be liable for the tax on the amount of debt forgiven.  The IRS considers the forgiven debt ‘taxable income’.

The expiration date is just around the corner and short sales can take anywhere from 3 to 9 months to close, so it is vital to get the process started now.

Another reason it is important to short sale now rather than later is the fact that as the banks start releasing REO (bank owned) properties into the market the supply of homes will increase and this may affect the prices offered as well as the number of offers received.  The better the price your home commands, the smaller the amount of the forgiven debt will be.

Lastly, if you are underwater in your home, sinking more money into it is not going to help you recover financially.  The best thing to do is get out from under it now, begin saving up money for your next home and rebuilding your credit.

Any questions or comments, please let me know. San Diego Short Sales


Looking for a home in San Diego?  Real Estate in San Diego