Industry
Warning: 2007 Mortgage Debt Forgiveness Act Expires In 9 Months!
HOMEOWNERS, If you are underwater with your home and meet
the requirements in hardship to qualify for a short sale…DO NOT SIT ON THE
FENCE…contact me today about doing a short sale immediately so your closing
happens THIS YEAR…while the MORTGAGE DEBT FORGIVENESS ACT is still in effect!
Remember, 4 million Americans have already lost their homes
to foreclosure, 6 million owners are currently delinquent and about 11 million
homeowners owe more than their homes are worth.
Mortgage Debt Forgiveness Act allows owners to exclude
up to $2 million in forgiven mortgage debt from their income. To qualify, that
debt has to be for your primary home — sorry, no vacation homes or investment
properties.
Without the Mortgage Debt Forgiveness Act cancellation of
debt, including mortgage reduction, is generally taxable. That means if the
lender takes a $100,000 loss on your home sale and you’re in the 28 percent tax
bracket, you’d owe $28,000 in federal taxes on the “income”. Only the funds
that you spent buying or improving your home count. So if you took extra cash
out of your house during a refinancing or with a home-equity loan, spent it on
vacations or on your kids’ college educations and then ran into trouble, you’re
out of luck. If you put part of the money into your home and spent the rest
elsewhere, you’ll need to be able to track those amounts.
Recourse or Non-Recourse Mortgage?
Although you may think you’ve finished the deal, if you live
in a “recourse” state, in which the bank can come after you for the amount you
owe beyond what the asset is worth, you may remain on the hook for years after
the fact. In 41 states and the District of Columbia, lenders can sue for the
balance of the debt long after the house is gone.
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