Mortgage Debt Relief Act extended to Dec 31st 2013: Episode #301
Hello. Welcome to Todd Miller TV. Breaking news! The Mortgage Debt Relief Act was just extended by Congress. It expired at the end of December of 2012. With this new budget deal, they extended it for a year pushing it off until the end of 2013. I mean it’s not likely to not get all the way until the end of 2013. So what does that mean specifically?
Well normally, if you have a debt on a personal primary residence and you short-sale the house and you have this outstanding balance, you’re liable tax-wise for that through the 1099 for that amount. They call it income but you have to pay taxes on it for primary residence. And there’s no – you have no mechanism to get rid of that normally. You can’t write it off as a loss as primary residents. You have to pay taxes on that loss which is sort of painful.
So what the government said is, to incentivize people to do short-sales to get out of their debts is they said, “Hey, we’ll just forgive of the debt. So if the bank says you’re forgiven, we won’t tax you on the losses income. So we need to issue the 1099 to get it wiped out.” So Mortgage Debt Relief Act, it’s been extended to the end of 2013.
If you’re upside down in your house, it’s a great time to do a short-sale. Of course, we do them here. We’ve talked about it on the blog before. Just give us a call and we’ll take care of everything. At this point, it’s kind of a no-brainer. They’re super easy to do and very high success rate most of the time.
Anyway, I thought I share that great news with you, good for you as a consumer and good for the industry I think as a whole. Anyway, that’s my update and hope to see you on another video. Thanks.