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Posts Tagged ‘tax relief’

Just When You Thought You Had a Break!

There was a law passed called the Mortgage Relief Debt Act that allowed people to not pay income taxes on mortgage debt that was forgiven by their bank.  For example, if a seller had a short sale on their home.  Let’s just say for example that they owed $330K to the bank but wound up selling for $300K.  All of the banks approved the sale and it went through.  The seller, according to the Mortgage Relief Act did not have to pay income tax on that 30K difference or the amount that was “forgiven” by the banks.  This act expires December, 31, 2013.

What this means is that any person who is currently involved in a short sale, foreclosure or loan modification program will have to pay income taxes on the amount that was forgiven.  Although Congress is in the works of trying to extend this law it may or may not be passed by years end.  Try to get all of your dealings wrapped up by the deadline so you can take advantage of the relief provided.

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