Short Sale and Foreclosure IRS New Laws Effective 2013

[angel]

Hello Everyone
Hope all is well with you all. I just want to share this information to all of you.

[angel]

Hello Everyone
Hope all is well with you all. I just want to share this information to all of you.

You may owe federal income taxes in 2013 if you have a short sale and foreclosure. Now is the time to make the hard decision. Are you going to walk away from your underwater home? Uncle Sam is still giving homeowners until Dec 31 2012 to go through a short sale or foreclosure. But effective Jan 1 2013 the rules change, the amount a lender forgives, either in a short sale or foreclosure on a primary residence will be taxable on federal income taxes.

So if a house sold $50,000 short of what is owed on the mortgage, then the selling homeowners will owe federal income taxes on that $50,000. Homeowners would owe $12,500 if they are in the 25% bracket and $7500 if in the 15% tax section. Homeowners would be on the hook even if the house sold but the bank had not formally forgiven the loan in a letter. The banks must officially sign off in writing before Dec 31 2012 otherwise you will be paying a huge tax to IRS.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence per IRS guidelines. Debt reduced through mortgage restructuring as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. Up to $2million of forgiven debt can be forgiven this year, $1million if married and filing separaely per IRS.

Homeowners declaring bankruptcy could escape paying income taxes on any cancellation of debt income if the debt is forgiven in the bankruptcy even if the debtor is solvent, said Nick Jovanivuch, a board dertified tax atty in Florida.

Bankruptcy trumps everything, he said. Or homeowners might not have to pay income taxes on any cancellation of debt income by Donna White of Sacramento Bee

Here's the link for IRS

http://www.irs.gov/individuals/artic...179414,00.html

[Lori Kelly]

Thanks Angel.

That's nice. Let's not extend this Rule. "We" can extend the Bush tax cuts but let's not do anything that will help the struggling middle class.

Did you know ONE IN TWO people in this country are poor?

The "new" poor are the middle class Americans who lost their homes to foreclosure, lost their jobs, lost their retirement, and are now faced with working until they drop dead.

This IS the United States of Corporations.

Anyone close to the point of not being able to pay your mortgage, foreclosure is a reality, you need to think really hard about what you are going to do.

I wouldn't do a short sale if you paid me. Honestly, and in my opinion, I don't see any benefit.

[angel]

Thanks Angel.

That's nice. Let's not extend this Rule. "We" can extend the Bush tax cuts but let's not do anything that will help the struggling middle class.

Did you know ONE IN TWO people in this country are poor?

The "new" poor are the middle class Americans who lost their homes to foreclosure, lost their jobs, lost their retirement, and are now faced with working until they drop dead.

This IS the United States of Corporations.

Anyone close to the point of not being able to pay your mortgage, foreclosure is a reality, you need to think really hard about what you are going to do.

I wouldn't do a short sale if you paid me. Honestly, and in my opinion, I don't see any benefit.

Hello Lori
I am still fighting my 2nd mortgage with BA the one that I have short sold in 2008, the last letter I've received from their CEO states their record shows there's still a balance of $86k and they are reviewing it and will get an answer in 60 days. I decided not to respond to that letter since I have all the negotiator's email saying I dont owe a thing.

The only benefit if you do Short Sale is you can buy a house in 3 years and if your credit score is 620 and up you're good to buy another home as your primary residence. Some lenders like Chase requires 7 years for Short Sale and 10 years for foreclosure, some require 4 years and of course you have to put down 5% at least but if you use VA no down payment required.

I thank God that my cataract surgery for both eyes are very successful, I can see 20/20 now. I dont need glasses at all. God is so good, he is solving my problem one problem at a time. My next appt is my neck and back pains, then the depression later. I really dont trust psychologist or psychiatrist I only trust the Lord Jesus as my Divine Healer and protector. I also thank God for friends like you, Cat, Teresa, and other bmc friends and christian friends. From the bottom of my heart thank you Lori you are really a very special person and a very good friend.

Faith

[Lori Kelly]

Hi Faith.

I consider you a good friend too.

You are right, a short sale is not as bad on the credit report than a foreclosure.

If I were you, I would respond to the letter you received.
And keep it really short and straight to the point.
Enclose a copy of the negotiator's email and state that any future attempts to collect the alleged debt will be considered harassment and a violation of California's Deceptive Business Practices.

There are many people you can put at the bottom of the letter but I can't remember all of them right now.

I might even add that I could take some time to research the loan that was sold short.
According to statistics, there is a good chance it was securitized.
A trip to the local land records might also show discrepancies in the chain of title.

If necessary, you will spend the time to research the title and have little doubt you can show a break in the chain of title, etc.

You won't do that because you know that they will do the right thing and send you a confirmation of the cancellation of the debt.

Then I would be put at the bottom of the letter:

cc: Barbara Desoer
Dan Frahm
California Attorney General

[khkobus]

Just amazing. What year is the new revolution ?

[Lori Kelly]

It's coming. Not sure when. Not a matter of if. That's my opinion.