Well that’s a good question. As most of you know the Mortgage Debt Relief Act of 2007 expires on 31 December 2012. This is creating quite the stir in the Short Sale world. In fact, many of the “Short Sale Gurus” out there, including CDPE, are using this as a reason to scare homeowners into doing a Short Sale now before they end up owing Uncle Sam a huge tax bill.
As with anything this important I have spent the last week doing as much research as I could on the issue. My conclusion is that if you do a Short Sale and end up owing taxes on the Forgiven Debt (deficiency) then you need to seriously consider finding a new Tax Professional.
Of course I am NOT a tax professional. This is just my opinion based on my research.
But this guy is a Tax Professional and his opinion is in line with my research. I bet he’d be willing to help you.
Some other resources.
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Now that we are in 2013, the answer is "No." Everyone can now utter a sigh of relief. On January 1st, Congress signed the H.R. 8, the American Taxpayer Relief Act of 2012 which continues the mortgage cancellation relief. It will continue throughout 2013. This is good news for the real estate industry. With the combination of responsible lending and tax benefits, we can continue to look to a more stable real estate industry.
Simon Campbell - http://www.bankforeclosuressale.com
Great info. BUT, what about a cash out refi 1st and 2nd (i.e., not purchase money debt). I need the same info about tax consequences.
That's what I'm talking about! WOW. Thank you so much. I have passed Nielsen's contact information on to my short sale client that had the wrong advice from her "accountant".
Great video Bryant! Thanks.