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2007 Tax Relief Act ends this December 2012

Posted by Brenda Swigert on May 27, 2012 at 12:09pm in Short Sale Discussions
Has anyone hehard if the tax relief act might be extended? Currently it is scheduled to end at the end of this year. Without this pur clients doing short sales will pay income tax on the amount that is dismissed. Any news  from RPAC on this? Thank you, Brenda Swigert CDPE Realtor Coldwell Banker West Shell West Chester, OH

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Tags: 2007, CDPE, Cheater, OH, RPAC, Tax, Weat, act, of, relief, sales, short, taxes
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Replies

  • Kimberley Kelly May 28, 2012 at 2:40am

    Here in California..hoping.  I bet "yes"..too much shadow inventory..

  • Bryant Tutas May 28, 2012 at 2:08am

    Here's a great explanation by someone much smarter than me :)

    http://shortsalesuperstars.com/profiles/blogs/will-you-owe-taxes-on...

    • Jessica Eisenhauer > Bryant Tutas May 28, 2012 at 10:21am

      Love this!  Thank you for sharing!!

  • Bryant Tutas May 28, 2012 at 12:51am

    I have heard that it may be extended but nothing official.

    By the way many home owners will still not have to pay taxes on the gain. Most will still be covered under the "Main Home" exemption of $250,000 individual and $500,00 for a couple.

    http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink10...

    • Sam > Bryant Tutas May 30, 2012 at 2:02am
      My wife is a very accomplished CPA and with my involvement in the short sale busness has become an expert in this area.

      That publication (2011 version) is specific to the rule with the current exclusion set to expire, if you look at prior years (prior to the exclusion), pub 523 does not allow for the inclusion of debt forgiveness as excludable income in the scenario. For example, the 2005 pub 523 specifically speaks to 1099a and 1099c income on the sale of the property and that it is to be placed on the 1040 as income.

      Nobody can predict what the instructions for 2013 pub 523 will be, but if they do not extend this exclusion, and the instructions revert back to earlier versions, it looks like there will be some very real tax liability on short sales and foreclosures, even if it is your primary residence.
  • Joseph Alfe May 27, 2012 at 5:24pm

    I was just thinking about this today.  I'm willing to bet political discussion of this will begin closer to election time.

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