The Mortgage Relief and Debt Forgiveness Act of 2007 is scheduled to expire on December 31, 2012. With short sale time frames ranging from 4-10 months we’re coming up on decision making time for under water homeowners in Reno and Sparks, NV.
As of today, there aren’t any talks from NAR about pushing for an extension but in an election year you never know what can happen. Your decision may come down to trusting the powers in D.C. to extend or taking what they have already given.
How does the act work?
You short sell your home for $100,000 with $200,000 remaining on the loan. If the bank doesn’t come back for a deficiency judgment you’re on the hook for $100,000 in that tax year in the form of a 1099-c.
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation allows you to cancel this tax by using Form 982, the Reduction of Tax Attributes Due to Discharge of Indebtedness.
The Act doesn’t apply to all debts so check Publication 4861 to see if you’re eligible.
For more information on Reno and Sparks short sales contact Ricky at (775) 750-1437 or Ricky@Resnv.com