Mortgage Forgiveness Debt Relief Act Expires Dec  31 2013!

If you've been thinking about doing a  short sale on your North Georgia home, you might want to hurry up. The time is limited  for homeowners who want to ensure they aren't hit with a big tax bill because  they had to walk away from a mortgage obligation. The Mortgage Forgiveness Debt  Relief Act is set to expire on December 31, 2013.

At the height of the  housing crisis, Congress passed the Mortgage Forgiveness Debt Relief Act of  2007, designed to provide some consolation to folks who had lost their  homes.

In summary, the Mortgage Forgiveness Debt Relief Act states that  if you borrow money (up to $2 million dollars) from a bank or a commercial  lender and the lender cancels or forgives the debt (a.k.a. Short Sale) then you  are not responsible for paying taxes on the forgiven amount. This applies only  to primary residences, NOT investment properties.

The Mortgage  Forgiveness and Debt Relief Act applies to debt forgiven in calendar years 2007  through 2013. It has not yet been determined if the Mortgage Forgiveness Act  will be extended past 2013.

Upon the completion of a successful short  sale transaction, your bank is required by law to provide the IRS with a Form  1099-C. The 1099-C will show the IRS the amount of debt which was cancelled or  forgiven. Before December 20, 2007, (this is the date which the Mortgage  Forgiveness Debt Relief was enacted) the amount of forgiven debt was considered  to be taxable income. This is no longer the case for primary residences;  however, all this could change if the Mortgage Forgiveness Act is not  extended.

One of the most frequent questions we are asked regarding short  sale transactions involves the tax consequences of these situations. There is a  tremendous amount of mis-leading and 'completely false' information floating  around on the internet. Of course as a Realtor, we are not licensed to give  tax advice, and thus will strongly suggest that you always consult with a  licensed CPA or attorney when dealing with these matters; however, please click  the attached link to view the Mortgage Forgiveness Debt Relief Act as it appears  on the IRS web site (click link) http://www.irs.gov/individuals/article/0,,id=179414,00.html

We have helped hundreds of Georgia families avoid foreclosure.  Sellers facing foreclosure must remember that banks are not  looking out for you or your family. When you work with me and my team, our job  is to get between you and the bank. We represent our clients, NOT the banks.  It is our job to negotiate the best possible outcome. Ultimately, our job is to  take away the stress, protect our clients assets, and make the transaction as  smooth and stress-free as possible.