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.
6 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?
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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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