Bay Area

[SamShuehRealtor]

Congress passed a bill yesterday, The American Taxpayer Relief Act of 2012 (Sec. 202) which extends the Mortgage Forgiveness Debt Relief Act through December 31, 2013.

This legislation extends dozens of other tax cuts that have expired or are set to expire at the end of the year, including one that extends homeowners’ ability to deduct the cost of mortgage insurance on a qualified personal residence.

Under the federal tax code, all types of forgiven debt are treated as income, subject to regular taxes.  Because of the Mortgage Forgiveness Debt Relief Act, homeowners who get their mortgage debt forgiven through either a short sale or loan modification WILL NOT BE TAXED on the amount forgiven up to $2 million.

This law was set to expire December 31, 2012. If it hadn’t been extended, any forgiven amount of debt would be considered taxable income, which would be devastating for homeowners who are already experiencing financial hardship.

As for relocation assistance, it is mortgage, income or lender dependent

Sam Shueh, mba, cdpe, short sales

Keller Williams Realty

Cupertino, CA

[tjh]

Sam:

That explains why a short sale that I was interested in delisted in the middle of summer last year, came back to market today.

Only now, it says "some appliances may not be included".

The bums have been stripping the place waiting to see what happens.

[SamShuehRealtor]

With another year to go the sellers may be more reluctant to do a short sale that early. The surge of sellers, closings toward end last year was motivated by the proposed expiration on 12/31/2012.  

For investment property short sale the lender told me today it really depends on the amount, type, whether they refinanced for 2013...

CPA is a better source than us.

Sam Shueh

Sr Realtor

Keller Williams Realty

Cupertino, CA

[Jil]

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SamShuehRealtor wrote:

With another year to go the sellers may be more reluctant to do a short sale that early. The surge of sellers, closings toward end last year was motivated by the proposed expiration on 12/31/2012.  

For investment property short sale the lender told me today it really depends on the amount, type, whether they refinanced for 2013...CPA is a better source than us.

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During 2012 prices jumped that naturally brought the appraisal of many homes to get a refinance. If the prices goes up for this year 2013, most of the underwater homes will come out of red. Hence, short sales and foreclosure will soon be out. Hence, MRA will not be extended beyond 12/31/2013 and short seller must start early to complete the sale well before dead line. 

Otherwise, all deficiency is added to the family income (like the way people take out IRA money) and taxed accordingly.

If someone get 60k every year andshort sale write off is 120k, his/her income is 180k and taxed at the tax level bracket (if DRA is not extended).