It’s About Forgiveness
Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your Broward County principal residence. Uncle Sam is still giving homeowners until Dec. 31, 2012, to go through a short sale or foreclosure on their Broward County without tax consequences – as long as the lender officially releases the debt.To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
The Act was designed to help homeowners avoid additional financial hardship created by short sales, foreclosure and mortgage restructuring. But that window is closing soon. Because 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. Say you owe $500,000 on a home you sell in a Short Sale for $350,000. That leaves $150,000 to be forgiven by the Short Sale Bank. If forgiven, and the Seller of that home is in a 15% tax bracket, that could mean $22,500 in additional Federal income taxes. You may owe federal income taxes in 2013 if you have a short sale, foreclosure after this year.
So, if you have been thinking about doing a short sale on your Broward County home, you have decision making to do. Short sales can take a long time. And you don’t want to go into shock for taking a minute too long. For more details, visit http://www.irs.gov/ .
I personally live in Coral Springs and consider myself a Broward County real estate expert. Allow me to assist you with the purchase of your new home.
Thinking of selling your Broward County, FL home? Interested in finding out the current market value of your single-family home, condo or investment property? Give me call today to discuss what is happening in the Broward County real estate market and how I can best serve your real estate needs. I would be happy to give you a personalized comparative market analysis (CMA) and answer all of your questions.
Terri Poehler -Broward County, FL Real Estate Expert – Making it Happen for Home Buyers & Sellers!
Interested in buying a home in Broward, FL? In our inventory, we have a variety of Broward County properties to choose from to fit your individual lifestyle, budget and needs including:
- Broward County single-family homes for sale
- Broward County condos and townhomes for sale
- Broward County luxury golf homes for sale
- Broward County investment properties for sale
- Broward County waterfront properties for sale
Please fill out the online contact form or give me a call today.
Let’s talk!
Terri Poehler
RE/MAX Professionals Real Estate
9615 Westview Drive Coral Springs, FL 33076
954-294-3937
Fax 954-653-1332
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