Tax on Short Sale, Loan Modification and Foreclosure – Mortgage Forgiveness Debt Relief Act

Share This – Mortgage Forgiveness Debt Relief Act of 2007, one exception to paying cancellation of debt income – Part 5 – Welcome back to the Velocity of Money I am Michael J. Barnes Arizona’s and I’m with Velocity Financial and were here every week talking about all matters financial, regarding real estate as well as finances. Brett Fallon is back on the air with us again along with Mike Patenella who is a certified public accountant for the last 20 years and amazing brain, were glad he’s back on. Mike we were talking before the break about loan modifications, my point before going off the air was that people think they’re going to get this huge amount of money waived on a loan that they have, realistically what most loan modifications are going to look like is extended term, significantly lower interest rate, generally a fixed interest rate for the entire time, and in some cases they will do some principal reduction, and there is some exclusions for people having to pay tax on that, is that correct? Yes, there is, before I get into that keep in mind that with taxes normally not one rule applies to everybody, were going to talk general but everyone’s going to have their own specific situation, that they’re going to have to really check with somebody and make sure they’re doing the right thing. In 2007 in response to the economic situation, they passed a mortgage forgiveness debt relief act which essentially allows people to not pay tax on $2 million

2 comments to Tax on Short Sale, Loan Modification and Foreclosure – Mortgage Forgiveness Debt Relief Act

  • REMarketingThisWeek  says:

    If it truly is a short sale, and it is listed by a real estate agent, I’d offer less than the $49k. In a short sale the bank is working with the home owner and the real estate agent to sell the house in a reasonable amount of time on market. Generally they are priced near what the bank believes is the fair market value. I’d make an offer quickly and see what the bank does. Be aware when dealing with short sales and banks that it may take a very long time to close escrow.

  • demolitionbarbiedoll  says:

    Dude! Just a simple question, I came upon a home in Florida that originally went on the market for $149,000.00, now its at short sale for $49,000.00 -- what is the guidelines is far as value when making an offer m- would it be smart to ffer 60,000? or more? So you make sure you get the home -- or offer lets say, 50,000? Or less?

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