As a part of last minute fiscal cliff negotiations, the congress agreed to extend the Mortgage Debt Forgiveness Relief Act until the end of 2013.
What Is The Mortgage Debt Forgiveness Relief Act?
The MDFRA (sounds bad) was introduced in 2007 to waive the tax consequences until the end of 2012 on the debts discharged on foreclosures, short sales, and principle loan reductions. Typically, the amounts forgiven are taxable by the IRS. However, under this act most home owners qualify for complete forgiveness.
IF you are considering a short sale, do not wait until the end of the year to get started. These sales can take a long time and you do not want to be closing on a short sale on December 30th. I just sold one that settled on the 28th (trust me, don’t wait).
If you want to discuss a short sale contact me!