New short sale/foreclosure laws??

This isn't something new.. This has always been the law.. What is new is that the IRS has a waiver good through 2013, through the Mortgage and Debt Forgiveness Act. Under the IRS tax code, any debt that is forgiven is subject to income tax since you receive a benefit from the reduction of debt. This is called Phantom Income, and the company giving the discount will issue you a 1099C (Cancelation of Debt). If you do a short sale, and your lender agrees to discount the loan by $100K, then under the IRS tax laws, you would get a 1099C from your lender, and you would have to include that income on your returns.. And if there is any tax liability from that, you would be obligated to pay it.. In 2007, the Mortgage and Debt Forgiveness Act was initiated and was due to end in 2012, but the President extended it to December 2013. President Obama did include in his proposed budget for 2013 an extension of this act for another year, however it has not been approved.. Here is the IRS link regarding canceled debt. http://www.irs.gov/individuals/article/0,,id=179414,00.html I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

The Mortgage Forgiveness Debt Relief Act it is due to expire December 31, 2012. Although the President has included it in legislation currently under consideration by Congress, it is unlikely the current Congress will extend it, since they can't seem to do anything these days. All is not lost though. If, after your short sale, you are technically bankrupt (liabilities greater than assets), you may still obtain relief from the IRS. Talk to your accountant or look into IRS Form 982 for more details on ways to avoid paying tax on forgiven debt. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950