If your home is NOT a Short Sale, Say So!

NOT a short saleIf you are selling your home and it is not a short sale, say so on the listing.

Because of the housing crash and foreclosure crisis, short sales have gotten a bad rap for taking too long to close. Banks are getting better about approving short sales, but it usually takes weeks or months, and, in some cases, buyers become so frustrated that they back out of the deal.

A study by real estate professors at Florida International University and University of Southern Mississippi shows that by advertising your real estate property listing as “NOT A SHORT SALE,” it will sell quicker and for more money. The study concluded that, on average, homes advertised as not short sales sold eight weeks faster and sold for 2-5 percent more.

Source: Sun Sentinal

Mortgage Debt Relief Act Extended

If your home is facing foreclosure and you were unable to sell your house in 2012, there is good news: The Mortgage Debt Relief Act was extended by Congress for another year as part of the legislation that prevented the nation from the “fiscal cliff.”

This is especially good news to homeowners in South Florida, where home prices have dropped drastically since December 2006.

Mortgage Debt Relief ActNormally, when the bank forgives a portion of your loan, it is considered taxable income. The Mortgage Debt Relief Act allows homeowners who sell their homes through foreclosure or short sale to be exempt from being taxed on up to $2 million in savings. Homeowners who choose Loan Modification are also exempt up to the same amount.

Since it was passed in 2007, the Mortgage Debt Relief Act has saved Floridians alone millions of dollars. The bill will be extended until January 1, 2014.

Due to the extension of only one year, realtors are encouraging homeowners facing foreclosures to act, and some are even calling 2014 “the year of the short-sale.”

If you have questions about foreclosures, short-sales, or any other real estate issue, you should contact a Real Estate Attorney.

Source: http://www.newstimes.com/business/press-releases/article/Mortgage-Relief-Act-Extended-for-One-More-Year-4164464.php

Short Sales for Non-Delinquent Borrowers in Florida and Across the U.S.

Starting TODAY, for the first time ever, borrowers, in Florida and across the U.S., who have never missed a mortgage payment will be able to short sell their houses if they can demonstrate a hardship, such as loss of employment or the death of a spouse.

This new rule will allow for underwater homeowners to get rid of their mortgage and also take advantage of the Mortgage Forgiveness Debt Relief Act of 2007, which is expected to expire at the end of the year.

Previously, only delinquent borrowers have been eligible for short sales.

There is a downside. The average person suffers a 150 point credit score loss after a short sale. This will be no different for non-delinquent homeowners because there is no special coding that differentiates them from those who went months without paying their mortgages.

Photo courtesy of stockfreeimages.comThe Federal Housing Finance Agency (FHFA) is currently in discussions with the credit industry to determine if and how this new law will affect credit scoring, but no solution has been found as of yet.

If you are considering a short sale, you should consult an attorney to discuss your options. There are many things changing in the housing market, and it is important to have all of the facts before making a decision.

Source: Inman News

Last Chance for Short Sale Tax Breaks

If you are facing foreclosure or considering short-selling your home, you need to act FAST! The Mortgage Forgiveness Debt Relief Act of 2007 is set to expire December 31, 2012, just over two months from now.

What does this mean?

When you short-sell your home, you end up selling your house for less than the debt owed by making a deal with the bank. The bank will forgive a portion of the mortgage, which becomes a taxable income. The current debt relief act allows homeowners to be exempt from this tax, but this will not be the case starting January 1, 2013.

If short-sellers do not close by the end of the year, they could lose a lot of money, namely 10-35% of the forgiven debt, depending what tax bracket applies. If the bank forgives $200,000 of your mortgage, and you are in the 25% tax bracket, one of the middle brackets, you will have to pay $50,000 in taxes.

While selling your home may not be the most appealing option, it may be the most pragmatic way to prevent future financial hardships.

If you are considering a short-sale or have any questions regarding this or other real estate matters, please contact us at Boyer Law Firm.

Source: Tallahassee.com

Short sale sellers should think about closing in 2012

Since short sales can take months to process, homeowners considering a short sale may want to start the process sooner rather than later.

If a bank writes off debt in a short sale, it’s a “taxable event,” and the lender tells the Internal Revenue Service about the deal by submitting a “Form 1099-C, Cancellation of Debt” at the end of the year. Home sellers must acknowledge the amount when they fill out their federal taxes. Through Dec. 31, 2012, however, the federal government forgives any tax liability associated with forgiveness of a mortgage loan.

“In general, homeowners believe the government will extend this tax provision,” says San Diego Realtor Joy Bender. “However, as evidenced by the First Time Homebuyer Credit expiration in 2010, you can’t always count on the government to bail you out.”

The government generally considers forgiven debt to be income. If a seller has signed legal loan papers to take out a $200,000 mortgage and the lender accepts $100,000 in a short sale, for example, the seller received the equivalent of $100,000 in free money by government estimates. As a result, the IRS taxes it. For tax year 2012, however, the government still forgives the debt; in 2013, it might not.

The tax amount can be significant. On a debt of $100,000, a short-sale seller in the 25 percent tax bracket could end up owing $25,000 in income taxes.

If you are a buyer or seller interested in either conducting or purchasing a short sale, Boyer Law Firm is here to help, we have handled many short sale transactions and know what to look for.

This article has been provided to you thanks to Florida Realtors News & Events: http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=4&id=271220