Hello, I am Matt Fetick with SoldbyShortSale.com one of Philadelphia’s leading short sale specialists. One of many questions we are getting asked a lot lately as we near the end of 2012, has to do with what’s going to occur with the tax ramifications of doing a short sale. When you sell your own home by short sale or if you go to foreclosure, the unpaid debt is considered considerably taxable income. For example, when you owed $200,000 to your lender and you get foreclosed on and they finally sell it for $150,000 or we do a short sale for $175,000, the difference is called the forgiven amount. Technically the forgiven quantity may be unearned income that you could obtain a 1099 for and should have some tax liabilities.

When the market began plummeting, there was one thing called the Mortgage Debt Forgiveness Relief Act that Congress put into place. They said that for those who fullfill a short sale before the end of 2012 then you’re going to get a 1099 from your lender, however it is not a taxable occasion underneath most circumstances. People are calling wondering what they need to do if their short sale does not sell till 2013 and the Mortgage Debt Relief Act expires on the end of 2012. They’re wondering if they will be liable for taxes on the forgiven debt.

First off, Congress is poised to increase the act, so we count on that we will see that after the election after they get back to work we expect that they will lengthen it. Even when they don’t, your short sale may have no different consequences than the foreclosures in the longer term so far as tax ramifications go. I do recommend that you speak to an accountant. Many accountants imagine that the loss is offset to the potential earnings and it doesn’t make it a taxable event anyway. In case you give me a call I can suggest some accountants that can provide help to walk through the process.

So if you want to know extra concerning the Mortgage Debt Forgiveness Relief Act, whether you qualify for a short sale and why you should do a short sale, give me a call at this time at 610-427-4420. You can even visit us online at SoldbyShortSale.com and click for more information. Again, I am Matt Fetick, one of Philadelphia’s main short sale specialists and I look ahead to talking with you soon.

For more information on short sales and how to avoid foreclosure, visit the Sold By Short Sale blog or you can also contact the Matt Fetick team and get started today.