A tax break for distressed homeowners who mortgages were written down expired on Dec. 31.The 2007 measure exempted borrowers from federal taxes they normally would owe on assistance received from banks, primarily in the form of a seller’s forgiven home loan debt in a short sale.If a lender approves a short sale that’s $10,000 less than the seller owes on the home, for example, the lender absorbs the $10,000 loss. However, the IRS considers that $10,000 money that the seller made on the deal since he no longer owes as much to the bank. As a result, the IRS expects the seller to report that $10,000 as income – even if he never saw the money – unless Congress extends the tax break.Although the residential property market is in recovery, housing advocates contend that the market still needs this tax break that was put in place after the crash. More than 6 million homeowners in this country still owe more on their mortgages than the underlying properties are worth, they say, and failure to renew the tax break would only increase their financial burden. A report by the Congressional Research Service calculates that a middle-income homeowner who is granted a $20,000 reduction in mortgage debt could expect to owe $5,600 in federal taxes under the new reality.“It makes absolutely no sense,” says Sen. Debbie Stabenow D-Mich.. “This is not just about fairness for homeowners. This is about keeping the housing recovery alive.”Many of her colleagues agree, given the broad bipartisan support for an extension of the law. While Congress went on holiday break without taking action, it could revisit the issue as soon as next week, possibly passing a retroactive extension.However, an extension is not guaranteed. Owners considering a short sale currently should seek advice from a professional tax consultant or attorney
For over fifteen years now R& R Realty has been helping customers buy and sell Palm Beach homes for sale & real estate listings. Northern Palm Beach County is a spectacular place to live and we know every inch of it. Generally considered the end of the sub tropical zone, the Gulf Steam waters temper our climate for warm winters making for an amazing life style filled with boats, beaches, golf & convenience just 15 minutes from the Palm Beach Airport. Feel free to browse our website for more information on Palm Beach homes for sale and real estate listings including great local neighborhood maps of Juno Beach, Jupiter, Palm Beach Gardens, Singer Island and Jupiter Island. You may choose to search for Palm Beach homes for sale on your own at first or contact us and we will help tailor a search to your specific needs. We look forward to hearing from you! If you have any questions about Homes for sale in Palm Beach, please call me, Chris Ryder, the owner, directly on my cell phone at (561) 818-3858.
About Chris Ryder
I am the Broker/owner of R&R Realty In Juno Beach Florida.