Somehow Congress got something RIGHT! In between the temper tantrums and political horse-trading Congress threw those upside down and in most cases financially distressed homeowners a lifeline and extended the Mortgage Debit Relief act. For those that have no idea what this act does, I’ll give you the (pardon the word) “cliff” notes here. Here is the entire bill for your light read pleasure.
In the early years of the real estate bust( 2006-2007) Congress realized that our tax laws where written in a way that “if” you were given short sale approval (another words your lender agrees to accept an offer from another buyer to buy your home for less then is owed) the IRS would consider the negative amount you were approved as income.
Let’s take the following scenario as an example; say you brought your home at the height of the real estate market for $500,000. You now find yourself due to personal reasons (normally job loss, transfer of job, death, divorce etc) having to sell your home for less than you purchased your home. You hire a GREAT Realtor that specializes in short sales (HUGLY IMPORANT) and he or she finds a buyer and negotiates with your lender to accept the offer price. Now let’s say the sales price was $50,000 less than you paid for the house originally. The IRS prior to the Debit Relief act of 2007 considered the $50,000 in negative equity as additional income when you do your taxes. This $50,000 would be treated just like if you received a bonus at work. Crazy right? Talk about kicking someone when they’re down! This bill was originally scheduled to expire on January 2013( those dear leaders thought the housing crash would be over by 2013..crazy right!). Luckily, Congress was able to get together and extend this provision of the tax law for another year last week.
As a Realtor that’s been helping Fairfax and Loudoun county residents with short sales over the last fours years I cannot over state how important this extension is to both individual home owners facing tough times and our local real estate market. Thanks in large part to the (sometimes) organized short sale process many home owners where spared the credit disaster that a foreclosure has on borrowers credit reports(not to mention security clearances). Neighborhoods were also spared the blight of vacant homes as homeowners would no doubt abandon their homes.
Need more information on short sales in the Fairfax and Loudoun county areas? Call or email me for a private confidential meeting at your home (no, I don’t drive a car with Realtor painted all over it( aka clown car) and I don’t have one of those vanity plates that have cute saying like “ I sell 4 U” etc..) or my office.
Serving all of your Ashburn, Chantilly,Fairfax,Herndon, Reston, Leesburg, Mclean and Loudoun County area Real Estate needs