Will the Mortgage Debt Relief Act Of 2007, which expires at the end of this year 2012, will be extended?
Now, very briefly to explain what that is, that is a IRS provision, that basically states, if you are going to do a short sale and this is your primary residence and you have not pulled any money out above and beyond the original loan amount, that if you do a short sale you will not have to pay any taxes. Now in order for this to happen, your property also has to be sold by the end of this year, 2012.
In regards to my position if this law will be extended, my answer is, I do not know. But I do look at some of the facts, which is this, One, We are seeing a hard time in government for any law or bill to be extended or passed. Next, and that’s primarily based on the fact that we have different parties in each of the different houses. So as it stands right now, I don’t know if anything is going to get passed. Now after the elections and everything lines up such that it’s all one party one way or the other, it’s possible. But who knows, it may take a long period of time for them to be able to get this through and extend it again. So what that means to you is this, if you are at all considering a short sale or are on the fence and are counting on Mortgage Debt Relief Act Of 2007 to provide a protection for you to not have to pay any taxes, I advise getting started on a short sale quickly. Most people know that a short sale can take a couple of months if not a year. So what that means is, we’re here at the beginning of 2012, that you want to get your property listed and sold before that time frame. I wouldn’t risk it and wait too late in the game and try and hope that you can get a short sale done in a manner of 2-3 months and then lose that potential protection. Again, who knows what’s going to happen after this year’s time frame and so it’s something to consider. One thing that I always advice is to talk to your tax adviser to determine if you would be eligible for any of the other exemptions out there for not having to pay any taxes after a short sale. In that way you know a little bit about what your timing may be in this particular circumstance.
So again, that’s just my position on whether or not Will The Mortgage Debt Relief Act Of 2007 Be Extended?, who knows? But to be safe I advise getting started on your process right away. Thank you very much.