I know! The number surprised me too! The Mortgage Forgiveness Debt Relief Act, created in 2007, is set to end Dec. 31, 2012 unless Congress acts. What does this mean for homeowners who are underwater? Well, if you are in the process of a short sale, you may want to get it closed by before that deadline. However, depending on your circumstances, it may or may not matter when you you close.
Let's say you owe $400,000 on your house and the short sale number is set to close at $300,000. There is the possibility, without an extension, that $100,000 difference will be added to your income for you to pay taxes on. Ouch!! But wait...there's a thing called insolvency, the difference between your total debts and your assets. That might be your ticket! Seek professional advice from your CPA for details on this. Things like bankruptcy, 401ks, pensions, IRAs, assets (car, furniture, etc.) all play a part.
Not sure where you stand in today's market? Contact a Windhill Advisor for a complimentary analysis of the true value of your home, then decide how to proceed.