Over the last six years one of the biggest assets underwater and distressed homeowners in Orange County and across the United States have been able to fall back on is the Mortgage Debt Relief Act.
Thanks to the Mortgage Debt Relief Act homeowners who are underwater can sell their homes via short sale and if their lender taxes a loss on the sale, the former homeowner doesn’t have to fear the possibility of having to pay income tax if there is a balance or shortfall owed after the sale.
Avoiding the Fiscal Cliff
The Mortgage Debt Relief Act has been hotly debated across the United States over the years, and it even temporarily expired on 12/31/12, but was quickly renewed in early January much to the delight of underwater homeowners who wondered if they could face a huge income tax penalty after selling their home via short sale.
As of October 2013 the Mortgage Debt Relief Act is active until 12/31/13, but come January 1st there’s no guarantee that Congress will extend it again since Washington is eager to reduce the budget deficit over the next two years before President Obama leaves office.
What You Should Do Now
If you’re an underwater or distressed homeowner in Orange County, and you are considering short selling your home, you should start the short sale process now because, any homeowner who starts their short sale before 12/31/13 will be able to benefit from the Mortgage Debt Relief Act and not be concerned about paying income tax if their lender takes a loss on the sale of their home, should the Mortgage Debt
Relief Act expire.
For more information on the Mortgage Debt Relief Act, or what it takes to start the Short Sale process, contact Fred Sed & Associates today by calling us at (949) 272-0125.