If you have an underwater house you are thinking about dumping you might want to get off your duff and list the thing. You see normally when you sell a house for less than you owe on it you get a nasty little surprise from Uncle Sam, a tax bill for the difference. During the bust legislation was passed to put this tax on hold to make it easier for people to short sell. However that legislation expires at the end of 2012. Both the Federal government and the California State gov passed these acts so currently there are no tax consequences from a short sale.
Of course the debt forgivness act could be extended. But what if it isn't? This would probably mean fewer short sales and a lot more foreclosures. There are no tax consequences from foreclosure because in Cali most of those loans are non-recourse (but I'm no tax expert so don't listen to me).
The unfortunate thing is that most people have no idea about this tax thing and may not feel the need to hurry up and get out while the gettin's good.
10 comments:
Lack of planning for a tax expiration on your part does not constitute an emergency on the part of the Bank, who prefer to have short sales sit in pending limbo for eternity.
I am sure that a lot more drowners will be sitting on a phone on hold with the bank, but since the Bank has no skin in the game of your tax write off, it won't change any momentum in the listing of Short Sales.
Banks get to keep the books in the black by playing the short sale pending game for as long as possible.
I think I found a new scam by the banks themselves. I am watching a house in San Berdu county that has a posted short sale shown as being completed in 2009, but now all of a sudden it is now a foreclosure in 2012 on the original owner from way before the 2009 sale. Tax records show no sale or transfer of deed from the original owner ever happened. It was Tract Builder to first owner to the bank. No short sale ever happened. But Redfin says it did.
So how many short sales actually never happened in the IE?
The blog was absolutely fantastic! Lots of great information and inspiration, both of which we all need!
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I guess it is not yet. Well, it could only mean a recovery in some housing markets of some states and not that as whole short sale year. california real estate license
If you have an underwater house you are thinking about dumping you may need to get off your duff and list the thing.
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I always wanted to buy some properties in that place. Because I found that place very peaceful and cool. I really enjoy staying in that wonderful place.
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Even I feel 2012 will be great year for Short Sales or Listing real estate proprieties. I found your blog similar to my thoughts on real estate development in 2012.
Hello guys i have been reading this site for the past 4 months thats how long it took for my short sale to close. I just purchased a 2900sqft home in the Sycamore Creek community in S.Corona wich sold for $556,000 back in 2005 and i have it now and i paid about less than half of that. Its a mini mansion bit its mine ...I do have mello roos and hoa but There is no ghette bird flying above no graffiti no immigrants no bull period at night all i hear is sprinkler systems going off in peoples front lawn i moved from Anaheim so i think you get it .I still commute 30miles to work the drive is only 30min to the Oc at the worse its 45min I did try to buy in Eastvale wich is Really nice but the Doo Doo Smell kept going up my nose Sycamore creek is Dope the only thing i dont like is that its not very conveant the home depot all of my favorite shopping places are about 5 miles up the road but other than that its Great!
Congrats on the home. That's a nice area but you're right there aint much down there. I hang out up the road at Dos Lagos and the Crossings quite a bit. I usually hit Taps, TGIFs and sometimes the night club at the Citrus City Grill on saturdays.
Love your real estate blog. There is tons of great information here. I had no idea that if you sold your home of less than it is worth then you get a tax bill. I am hoping this never happens to me.
You get a tax bill only if there is forgiven debt. You can sell your home for whatever you like. But if your lender is allowing you to sell it for less than you owe them and they are "forgiving" the balance of the debt then normally you will get hit with a 1099 form for that amount. It would certainly be a nasty surprise if you did not know it was coming.
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