Home / Short Sales / Short Sales and the Expiring Taxpayer Relief Act. Episode #241
Short Sales and the Expiring Taxpayer Relief Act. Episode #241
Todd: Hello! Welcome to Todd Miller TV. Joined here once again by Short Sale agent extraordinaire Amanda Brown. Thank you for being on the show today.
Amanda: Thank you for asking me to be on the show.
Todd: So I wanna talk about the Tax Relief Act. This is an Act that was put in place by President Bush and it expires at the end of the year.
Amanda: Yes, it expires on December 31st.
Todd: Okay, so what/why would somebody that wants to do a short sale, and has been thinking about like may/I’ll put it off until next year. Why/what should they know about Tax Act.
Amanda: That Tax Relief Act benefits primary homeowners and the short sales. The act came into place to basically help protect the primary owners to not have to pay taxes on their short sale. When you do a short sale you will get 1099 With the Tax Relief act you get a 1099c which is a cancellation of debts. Which means you do not have to pay the taxes as taxable income. When they talk about the taxes, what they are referring to is, say you bought your house for a $100,000, We sold it for $50,000, that $50,000 difference is considered taxable income.
Todd: Okay so this is important. ‘Cause I don’t the average person really gets the gravity of this. Okay, If you earn income, the I.R.S. can come after you forever. They can take/they can garnish wages, they have a lot of power. If a lender issues a 1099 what they’re saying is, we loan you $400,000 we only get $200,000 for the back for the house. So for this year, we’re gonna issue to the I.R.S. a 1099 which is something saying you/we paid you 400 or $200,000 and then the I.R.S. is gonna calculate that and say “Well you owe us all these taxes on that money,” and they can come after you forever on that money.
Todd: Okay, that ends at the end of this year?
Amanda: Yes, it ends up this year. And you know, just like everything else, there’s talk of extensions, there’s talk of not extensions, there’s talk about President Obama’s gonna extend that right before the election, there’s talk about it won’t be extended because anything that helps with the budget will not be extended. But the bottomline is, you can’t mess around with it ’cause it so far has not been extended and expires on December 31st.
Todd: Let’s say it doesn’t get extended, And then somebody’s waiting to write for the election to see if Obama extends it. Are they gonna have time to do a short sale in a month?
Amanda: No, No. I mean, right now nearly is we’re getting to the cut-off. If you are in having to do this because of it’s probably for urgency and you need to get rid of the taxes, you need to sign up for the short sale like right now.You have no time.
Todd: Okay. We went through this with the home buyer credit and everybody said it’s gonna get extended, they’re gonna extend it, and they didn’t extend it. And they said about 2 months before and then there was this massive panic. Last year where everybody was trying to get in and buy before the deadline and then you know, that was it. So I mean that can certainly happen.
Amanda. Yes. we’re already kinda feeling it happen right now. Luckily we’ve had success with the short sales and working with you know, some of the bigger banks are moving along a lot quicker. So it’s going okay but it’s gonna/yeah. I think once October hits, it’s gonna be chaotic.
Todd: Okay. Tax Relief Act ends at the end of the year. If you’re trying to do a short sale and you want the debt relief and you want to not have to deal with 1099 and all those stuff.
Amanda: On a primary residency.
Todd: Primary residency, call Amanda. Your number is:
Todd: Alright. Thanks you for being on the show.
Amanda: Thank you.
Todd: That is my update for today and hope to see you on another video. Thanks!