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December 2007
• Dec. 27, 2007 - Mortgage Forgiveness Tax Relief Act signed into Law
Good News If You SHOULD Have to Short Sell
On December 20th President Bush signed into law the Mortgage Forgiveness Tax Relief Act. The gist of this legislation is to eliminate the income tax due on the portion of debt that the bank "forgives" in a short sale, or a foreclosure or in certain instances where the bank agrees to refinance a new smaller mortgage and forgives the portion that the house has declined in value - which IS now sometimes taking place.
In my article in short selling I mentioned that one of the risks is that the bank would issue a 1099 to the borrower for the portion they did not recover in a short sale or foreclosure. Previous to this legislation that 1099 for debt forgiveness would be considered income in the eyes of the IRS and would be taxed at the borrowers tax rate.
This law would eliminate a taxable gain on borrowers who received a forgiveness of debt from a lender in a short sale. Normally, if a lender forgives the debt, to this extent the homeowner would have a taxable gain. HR 3648 would eliminate this "phantom income" on a borrower's principal residence. The law applies to all debt forgiven from Jan 1, 2007 and on.
Note though that this legislation is ONLY for a borrowers principal residence. MANY of these short sales here in Southwest Florida are for either 2nd homes or investment property and this does not offer any help in that case. You would of course want to consult with a tax professional before filing next year if this turns out to be in your future. And in Sarasota it's in a LOT of futures. I have 10 active listings right now and at least half ARE short sales or have the potential to be one if the market declines further. Below is a statement by the National Association of Realtors regarding the legislation.
By the way I can't emphasize enough - talk to a Realtor who has DONE short sales BEFORE you get in trouble missing payments on your mortgage. You need to understand your options and I note now that some banks are making "Deed in Lieu of Foreclosure" seem "easy" - they don't disclose that this is every bit as bad on your credit AS a foreclosure and in MOST cases there are better workarounds.
- Mike W.
http://www.realtor.org/press_room/news_releases/2007/president_bush_signing_mortgage_forgiveness.html |
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• Dec. 13, 2007 - Bank Of America Realtor Survey for November 2007
Bank Of America Realtor Survey Results for November 2007
As I have mentioned in the past I am a Realtor participant in Bank of America's monthly survey of Realtors in about 40 markets in the US to guage market activity. The Sarasota Bradenton market is on page 47 of the survey results which you can download here. Not surprising - November has been pretty slow and the survey results reflect that. Southwest Florida's true selling season is January through early May so it will be interesting to see if this trends up over the next 60 days. I'll post the results for Dec and Jan so you can spot the trend.
- Mike W.
http://www.realtownblogs.com/uploads/RingTheWingers_November20RE20Agent20Survey.pdf
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• Dec. 13, 2007 - My Safe Florida Remibursement Money Not Taxable
IRS Ruling on My Safe Florida Home Grant is Non Taxable
You may already have heard of this program and many of you may in fact have applied and even had some of the retrofits done to make your home more stormworthy. Today Florida Realtors.org published the article linked below showing that the IRS has determined that the grants are not subject to Federal Income Tax! That is very good news. Even if you elect not to do everything that is reccommended to your home when it is evaluated you will very much benefit from the report that the program sends you on the stormworthiness of your home as it currently sits and what can be done to improve it. If your home is more than 5 or 6 years old it's just about a guarantee there will be some low hanging fruit here - inexpensive things you can do to greatly improve your homes survivability in the next wind event. My own home was built in 1989 - up North that's quite new - but here in Florida it's practically ancient! But the addition of shutters, a new garage door and some other changes really quickly and relatively inexpensively raised it's score. And most of the reccommened additons qualify for matching grant money. So let the state help you bring your home up to snuff! And now you don't even owe tax on the grant money! Send me a note if you want more information. See the article below.
- Mike W.
MY SAFE FLORIDA HOME
Not only can Floridians receive state grants through the My Safe Florida Home program to boost their homes' defenses against storms, but that money is tax-free, according to a ruling issued by the IRS and released yesterday by Florida Chief Financial Officer Alex Sink.
Read the full story:
http://www.floridarealtors.org/NewsAndEvents/n2-121307.cfm |
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Real Estate Market statistics, buying, selling strategies, financing, insurance for Sarasota, Siesta Key and the barrier islands from Ann & Mike Winger, REALTORS with REMAX Tropical Sands.
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