Mortgage Debt Relief act is set to expire at the end of this year!

http://youtu.be/Cs1ZORFI6LA

Mortgage Debt Relief act is set to expire at the end of this year!
Call to schedule a no obligation consultation. 703-587-0995.

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation:

For the IRS Link go to : http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-

Two Questions I Always Hear About Short Sales…

Short Sales and Deficiency Judgements

[youtube http://www.youtube.com/watch?v=piFM_IBDuRg?rel=0]

Watch on your mobile device >>

Are you wondering what to do if your home is worth less than what is owed on it? If that is the case, then chances are that you can and may need to join the ranks of others going through the same thing. Though one option is to continue paying the mortgage and just live through it – what happens when certain circumstances step in and you have no choice?
Those circumstances are called hardships and they are specific in terms of whether or not a bank will accept the reason for needing a short sale. Hardships can be anything from a divorce that forces a couple to sell a home, job loss or relocation, death of a spouse or loss of income. Regardless of the type of hardship, you will need to present a hardship letter to the bank and it must be validated and approved by the bank in order to proceed.
Looking at an example of a home with a $300,000 mortgage on it but is worth $200,000 – clearly if the owners want to sell the property there will be an outstanding debt obligation of $100,000. That difference of $100,000 is called the deficiency in a short sale and a common question asked by many owners considering short sale is “how does a bank handle that difference?”
Deficiency judgment can very well be demanded by the lender in case of a short sale however if your short sale is well handled by your agent, there is a good chance you can have that deficiency waived. In other words, when the transaction goes through the bank can either include in the contract that they reserve the right to come after you to collect on that deficiency. A good negotiator will obtain a full release of that debt, allowing you to walk away without owing anything more.
There are some happy mediums as well, such as the bank issuing a promissory note to the sellers or the owner providing some up front cash to offset the bank’s loss. This could be something like $5,000 or $10,000 or more depending on the property and the bank but it is a matter of aligning with the lender to satisfy them. The important thing is to have an agent that knows what they are doing so they can negotiate the best terms possible for your sale.
Each situation is unique and each homeowner has a set of circumstances that cannot be duplicated with others. To get customized advice on your home, contact us today at 703.587.0995 or visit our sitewww.VirginiaShortSaleAdvice.com for more information.