In Tuesday’s Sarasota Sales Meeting & Caravan, Branch Manager Darla Furst mentioned the following article about Short Sales and Foreclosure Tax Implications for 2012 and beyond. It’s a very good article to read and study. With any financial transaction like this, there are pros and cons – and it’s important to consult all of the right experts such as a tax accountant and/or attorney. Rushing into a decision to short sell or foreclose shouldn’t be done based on articles like these, but instead on sound advice from the right experts.
WASHINGTON – Jan. 9, 2012 – You may owe federal income taxes in 2013 if you have a short sale, foreclosure after this year. Now is the time to make the hard decision: Are you going to walk away from your underwater home?
Uncle Sam is still giving homeowners until Dec. 31, 2012, to go through a short sale or foreclosure without tax consequences – as long as the lender officially releases the debt.
But on Jan. 1, 2013, the rules change: The amount a lender forgives, ether in a short sale or foreclosure, on a primary residence will be taxable on federal income taxes.
So if a house sold $50,000 short of what is owed on the mortgage, then the selling homeowners will owe federal income taxes on that $50,000. Homeowners would owe $12,500 if they’re in the 25 percent bracket; $7,500 if in the 15 percent tax section.
Homeowners would be on the hook even if the house sold but the bank had not formally forgiven the loan in a letter: The banks must officially sign off in writing before Dec. 31. (More …)
(MCT)—The short sale process could get a lot quicker starting this summer under new rules that will require lenders to respond to offers within a month.
