Short Sale Tax Implications 2014

Property values may rise and fall periodically due to fluctuations in the market and other factors. Because real estate values can decline in any market, there are some situations when an individual needs to sell a property quickly but may be upside down with a mortgage loan. If you owe more on your mortgage than the property is worth and cannot wait for equity to build in the property, you could sell the property for a loss and pay off the remaining mortgage balance with your own personal funds. Another option is to pursue a short sale. A short sale occurs when a lender agrees to accept a lower amount for the mortgage payoff than what is owed. While this can benefit you financially, there are some tax implications that you should consider before you proceed with a short sale.

The Current Tax Rules Regarding Short Sales
The tax code changes regularly, and the short sale tax implications 2014 will impact you if you completed the sale of the property in the 2014 tax year. When you sell a property, you are required to pay capital gains taxes on the profit from the sale when you file your tax return. There are homestead exemptions and other rules that may apply, and you can work with an accountant to learn more. When you sell a property on a short sale, the lender is forgiving a portion of your debt on that property. As part of the short sale tax implications 2014, you should be aware that the lender is required to report any canceled debt to the IRS.

Exclusions to this
With short sale tax implications 2014, you should also be aware that the Mortgage Forgiveness Debt Relief Act has created a homestead exclusion that may apply to you. If you lived in the home as your primary residence for two of the last five years, you may be able to exclude up to $250,000 of capital gains for individuals or up to $500,000 of capital gains for married couples.

The short sale tax implications for 2014 may mean that some property owners need to pay taxes on their property’s sale even when pursuing a short sale. However, the homestead exclusion may apply to many individuals. If you are interested in learning more about this, you may seek advice from your accountant before making the final decision to pursue a short sale.

Ocwen Altisource Hubzu

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In the world of high-finance and home mortgages, situations can become very complex and at times confusing when a company’s practices are called into question. This has been the case with Ocwen Altisource Hubzu, which in recent months has come under fire from the New York State Department of Financial Services regarding its handling of so-called “problem mortgages.”

An Atmosphere of Nepotism
What has made many regulators uneasy last year and this year has been the increasing sense of nepotism regarding the business relationships between Ocwen Altisource Hubzu and William Erbey, who owns all three of the companies. According to Benjamin Lawsky, head of the New York State Department of Financial Services, Hubzu has been charging Ocwen properties auction fees that are supposedly three times higher than those which are charged on most other properties. In turn, these higher fees are passed on to borrowers and also investors. These allegations are what have Lawsky concerned about possible “self-dealing,” meaning that the companies are acting more in their own best interests rather than those of their clients.

An Interconnected Empire
What has regulators asking numerous questions about Ocwen Altisource Hubzu is the apparent level of interconnectedness within the companies. They are also concerned about Erbey’s recent decision to move his company’s headquarters to St. Croix in the Virgin Islands, which allows him to skirt U.S. tax regulations and pay only a minimal corporate income tax due to the area’s designation as an economic development zone. In addition, Erbey has also made outsourcing a way of life for his businesses, sending as much work as possible to India to lower his costs of doing business. As for the interconnectedness of the companies, regulators are looking at complaints from clients that point to continued self-dealing. For example, Altisource buys delinquent loans from Ocwen and then turns the properties into single-family rentals that are subsidized by Altisource Portfolio Solutions.

Falling Stock Prices
As a result of the controversy, the stock prices of Ocwen have fallen more than 30 percent since the beginning of this year. With regulators continuing to ask questions of Erbey, the financial fortunes of Ocwen Altisource Hubzu may fall even further before all is said and done. While Erbey has found himself at number 243 on the Forbes 400 list of U.S. billionaires, it’s clear that whatever he has been doing has worked for him regarding his ability to compile a personal fortune. However, with regulators continuing to ask questions and dig deeper into his company’s dealings, many industry experts are awaiting a fall from grace for Erbey and his empire.

Short Sale Hardship Letters That Work

If you are facing a potential foreclosure and are thinking about a short sale to stop the foreclosure proceedings, you are not alone. A short sale is a common and often effective way to avoid a foreclosure, but before you can move forward with this plan, you may first draft an effective letter to your bank or financial institution stating your case. In most cases, the short sale hardship letter will be reviewed by a financial loss mitigator who will look at your case from a financial perspective. However, this will be a human with feelings and who may be swayed by an emotional appeal as well. With this in mind, you should be aware of what it takes to write short sale hardship letters that work.

Understand the Motivations of the Financial Institution
In order to draft short sale hardship letters that work, you must appeal to the bank from a financial perspective. The bank will not agree to a short sale if they believe that a loss is not inevitable. Instead, they will want you to move forward with a plan that puts more money in their pocket overall. The short sale is most likely to be accepted if there is a financial hardship impacting the borrower, if the mortgage is already in default and if the market value of the property has decreased. Hardships may relate to everything from the loss of a family member to serving in the military overseas or an unexpected decline in income.

State Your Case Factually While Appealing to Emotion
When preparing short sale hardship letters that work, you must explain the facts carefully and factually. These facts should be written in a clear, concise format with financial information related to property value, loss and more easy to follow and understand. While the financial facts should be clearly stated, keep in mind that the best letters are those that appeal to the reader from an emotional perspective as well. Defining the hardship and adding emotional details is great, but you should avoid whining. There is a fine line between appealing to someone’s emotional side and annoying them with whining.

Banks do not have to approve a short sale request, and the letter that you prepare may be one of the keys to a positive result for your request. If you want to draft a short sale hardship letter that has the best chance of giving you the results you desire, consider following these tips.

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