Hello everyone Toni Patillo here with Toni Patillo and Associates coming to you today with some great information on short sales. If you need to sell your distressed property fast please contact our office in Southern California or visit my website to learn about your options for avoiding foreclosure. In my blog today I wanted to discuss a question I get asked frequently that deals with the tax ramifications of a short sale.
This is a truly unique question in that tax ramifications of a short sale will likely be different for every homeowner. This is a subject you will want to discuss with a licensed accountant before pursuing in order to understand the long term consequences of a short sale. Thankfully right now we have a great opportunity available to homeowners through the Mortgage Debt Relief Act. This Act of Congress allows a homeowner to avoid paying taxes on the debt forgiven through their short sale. When a short sale is completed the difference between the selling price of your home and amount of money owed is forgiven debt. Since this money was borrowed by the homeowner and never re-paid it is considered income by the IRS and will require a 1099-C to be issued. However, it is important to note that the Mortgage Debt Relief Act expires at the end on 2013 so it is important to act fast. On average a short sale in Southern California will take around three months to complete so you will want to act fast. There are no signs of another extension from Congress so make sure to contact your tax expert now before it is too late.
If you have questions about the short sale process or need to sell your home now please give me a call. Toni Patillo and Associates help homeowners like you avoid foreclosure every day and want to educate you on your options. Please contact us with any questions you have about selling your home for less than what you owe.