If you are Contemplating a Short Sale – do it this year!

Back in 2007 Congress approved a debt forgiveness law for homeowners when they do a short sale and the lender forgiveness portion is not repaid.

Normally, the portion forgiven is treated as taxable income to the borrower.  The Debt Forgiveness Act provides relief to troubled borrowers when some portion is forgiven.  That relief expires on Dec 31st, 2012.  The transaction must close by Dec 31st to qualify.  The Act could possibly be extended, but there is no guarantee.   Given how long short sales take to process, if you are considering a short sale, contact your Realtor (me) now to find out your options and how to proceed.

Borrowers whose debt is reduced or eliminated will receive a year-end statement from their lender, IRS Form 1099-C. Eligible homeowners must complete several lines on IRS Form 982 which must be included when filing their federal income tax return to claim the mortgage relief. For more information, review IRS Publication 4681 and IRS Form 982, or consult a qualified accountant or attorney.