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San Diego Short Sale Debt Forgiveness Act is Expiring


San Diego Short Sale Debt Forgiveness Act is Expiring

STILL DEBATING SHORT SELLING YOUR SAN DIEGO HOME THIS YEAR? THESE LOOMING TAX LAW CHANGES MAY HELP YOU DECIDE.

If you’re like many current San Diego homeowners, you may be struggling with how to handle a mortgage underwater. The decision regarding such a burden is not an easy one. But, if you’ve found yourself debating whether or not to take the steps needed toward a Short Sale versus sticking it out, know this: your clock is ticking.San Diego Short Sale Law Expiring

How? If you’re not familiar with the Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA), you should be. It was passed by President Bush years ago as a means of protecting homeowners from huge tax bills after they had completed short sales of their homes. Prior to the Act, any debt that was forgiven or cancelled by a lender had to be included as a 1099C, meaning the difference that was “forgiven” would be seen as taxable income for the seller. So, sellers could avoid the hardship of foreclosure, but instead would be slapped with a huge bill when tax season rolled around. Despite the fact that it’s been around for years, many homeowners are unaware of its existence, and it’s impact on their own mortgage situation.

Currently, homeowners who qualify for the MRDRA still receive a 1099C, but its considered non-taxable, and thus allows them to evade thousands of dollars in what would’ve otherwise been tax bills. Over the past several years this bill has greatly helped to reduce the burdens of homeowners forced to short sell their homes, and has helped the housing market in general. The limitation: the MFDRA ENDS December 31, 2012.

Although many in the housing market believe that there will be significant lobbying to try to extend this tax break, there is no clear indication that an extension will be passed. December may seem like a long ways off, but take these further points into consideration to understand what the end of the MFDRA means to you:

Transactions involving short sales currently take an estimated 3-9 months to close, more or less, generally dependent upon the lender and the experience of your sales agent their team of transaction coordinators. At this stage in the game, it is absolutely imperative that you choose a sales team well versed in Short Sale negotiations and related laws. Individuals such as Matt Hackett with Gold Coast Properties understand the implications of losing or selling your home, and know what it takes to not only get the ball rolling, but how to avoid and smoothly transition through the many obstacles that can inevitably occur along the way when dealing with today’s buyers.

If you’re still debating whether or not you even need to do a short sale, you might be right. A short sale may not be necessary for every situation. Sometimes a loan modification or forbearance can be a solution. However, keep in mind that approximately 58% of all applicants are rejected, AND the application/decision process can take 3-6months to be decided upon. If rejected, it leaves little time to move forward with the short sale route, which at that point, may be your only option left.

Understanding the urgency and impact of the end of this act now may mean saving you thousands of dollars down the road. Deciding to short sale your home is undoubtedly a daunting decision to make, but it’s also often less devastating than foreclosure or bankruptcy, especially with the end of the MFRDA Act at the end of the year. It may be the path you need to take to help you get out from under a huge mortgage to a place where you have the opportunity to start over. If you’re considering Short Selling in San Diego, Los Angeles, or the surrounding areas, and would like to discuss your situation and options, contact Matt Hackett with Gold Coast Properties for a free consultation and more details about how the Mortgage Forgiveness Debt Relief Act may affect your decision. Don’t wait! Call 858-361-2728 TODAY!

**Gold Coast Properties Recommends All Clients Consult and Attorney, Financial Consultant & CPA prior to completing a Short Sale

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