With the passage of The American Taxpayer Relieft Act of 2012 which was just passed by Congress, the Mortgage Debt Forgiveness act of 2007 has been extended another year. This is very important to homeowners facing the need to do a short sale on their primary residence. If you owe a debt and the debt is cancelled, the cancelled amount may be taxable income. When doing a short sale, home sellers receive a 1099 for the amount of debt forgiven in the transaction. This amount may be taxable income. Under the Mortgage Debt Forgiveness Act of 2007 up to $2 million dollars in debt forgiven may be eligible for an exclusion under this provision. Click here to read more about the Debt Forgiveness Act of 2007 on the IRS website.
Home sellers are encourage to consult their tax preparer or CPA to determine how this exclusion would be applied in their individual situation.
If you or someone you know has been considering a short sale please contact me today for assistance. Amy Shocket, Certified Distressed Property Expert, 775-815-7627. amyshocket@sbcglobal.net
