Temecula Valley California homeowners will be faced with another obstacle to short sale starting January 1, 2013. The mortgage debt tax relief is scheduled to end December 31, 2012.
What this means is forgiven mortgage debt will now be taxable if, and if is the big word, the mortgage debt tax relief act is not extended, or some version thereof, put in to law. Given the general election this November, the mortgage debt tax relief act is not a number one priority for Congress.
Although the National Association of Realtors® is calling for the mortgage debt relief to be extended, at this point, it is an uncertainty.
Given the complexity of short sales and the financial impact they can have on the future to Temecula Valley California homeowners, it has always been broker recommended a homeowner considering a short sale consult with a licensed tax professional, CPA or attorney.
Short sales are especially complex when there has been a refinance, or there is a second mortgage. Bankruptcy can also impact the success of a short sale. Although the good word may be short sales are easier, in reality this is not the case. Banks have share holders they are responsible to, and are not so quick to approve short sales. The process can drag on for months, keeping both sellers and buyers on edge "waiting for an answer," and then the answer may not be what both were expecting.
If a Temecula Valley California homeowner is underwater in their mortgage, it may be best to explore other options before jumping to a short sale. Loan modification, bankruptcy, or renting the property may help to alleviate the problem. Each homeowner's situation is different and a short sale may not be for every homeowner who is underwater in their mortgage.
Most experts agree, that the mortgage debt tax relief, if not extended, will impact short sale sellers in the coming year.