Boca Raton Short Sale News: Tax Relief Extended for Short Sales
Boca Raton Short Sale News: Tax Relief Extended for Short Sales
Many Boca Raton home owners were relieved when Congress approved the Fiscal Cliff deal that extended tax relief for short sales. Those who were anxiously watching the clock in the hopes that their short sale to close before January 1 were able to breathe a huge sigh of relief when the Mortgage Forgiveness Debt Relief Act was extended for another 12 months. Under the 2007 law, homeowners do not have to pay federal income taxes on mortgage debt forgiven by lenders on short sales, foreclosures or loan modifications. Such debt relief was previously taxed as income.
Adds Dionna Hall, COO with The Realtors Association of the Palm Beaches, "This is going to be a great relief to people who are trying to short sale their property or who are even in foreclosure. It actually means people are not going to have to pay an income tax on the amount of forgiven debt.”
There are currently about 8,500 Palm Beach short sales on the market, with approximately 700 of those being Boca Raton Short Sales, and now, these home owners have another 12 months to sort out their housing woes before the tax credit expires again. Real estate agents caution home buyers not to expect another extension, and instead say they should use this opportunity to try and complete their short sale as soon as possible. This will avoid the same type of anxiety and stress that so many Boca Raton home owners experienced at the end of 2012.
The tax extension is also a benefit for home owners who are in the process of a foreclosure. Records show that there more than 39,000 pending foreclosures cases in Palm Beach County alone. For Boca Raton home owners who can finalize their foreclosure before the end of 2013, most will avoid paying income tax on the amount of money owed to their bank. This extension is great news for Palm Beach, where short sales -- a transaction in which lenders allow a home to sell for less than the value of the mortgage -- have played a key role in the recovery of the region's real estate market.
John Seebree, senior vice president of public policy at Florida Realtors, notes, "It's a major victory, especially for those who are in the process of buying right now. If you had a contract on a property and it didn't close by Dec. 31, and suddenly everything changed, that would be in a difficult position to be in."
It’s imperative that home owners act while time is on their side. Right now, they have the entire calendar year to make strides at getting a short sale or foreclosure completed. The Mortgage Forgiveness Debt Relief Act was first enacted in 2007, and there's no guarantee that it will be extended further, especially if the country’s real estate market continues to improve in 2013.
If you'd like more information on Boca Raton short sales or Boca Raton real estate currently on the market, please give us a call today. We'd love to share the latest Boca Raton real estate news that's shaping the local community.
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