Jacksonville Florida Short Sales FAQ: What are the Tax Ramifications of Doing A Short Sale?
This one gets alot of home sellers because not only do they have to deal with the ramifications of the short sale itself, but also tax issues. I should point out, that I am not a tax expert, so I won’t give you tax advice, but will point you in the right direction. For, one, your CPA is a good person to talk to about the tax ramifications of doing a short sale on your Jacksonville home.
The other place to look is online at the IRS website. You may have heard of the Mortgage Forgiveness Debt Relief Act of 2007. Before this came about, if you were to sell your house short, the balance that your lien holder did not collect was considered income, and would be taxable. You would receive a 1099 in January or February after the home had closed. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain canceled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. There are some conditions, so make sure you either talk to your CPA or visit the Mortgage Forgiveness Debt Relief Act of 2007 page. This has been extended until January 1, 2014.
If you don’t qualify for the Mortgage Forgiveness Debt Relief Act of 2007, it may be possible to prove that you are insolvent, which means you have more debt than assets. It’s not that simple, as you know, we are dealing with our government. So, speak to your CPA, to determine if that is your situation.
Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.
I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.
Coming soon, more Jacksonville Florida Short Sales FAQ:
How long will a short sale take?
Will the bank come after me for the difference?
How will a short sale affect my credit?
I have no money, will I have to bring money to closing?
How will the closing costs get paid?
How long does it take for the bank to foreclose on my home?
What are the tax ramifications doing a short sale?
How does the bank determine how much they will accept?
Can a family member buy my home, then let me stay and rent it from them?
How do I hire the best real estate agent to get my short sale done?
