Debt Relief Act and short selling
The IRS’s version may confuse you, so here’s the basic explanation of the Mortgage Forgiveness Debt Relief Act and Debt Cancellation provision that you hear us mention in some of our radio commercials.
At one time, if a bank forgave what you owed on your mortgage for any reason (in a foreclosure, for example), the amount would be considered taxable income to you. That stinks. Under the MFDRDC provision, you are no longer taxed on that amount. That’s cool.
However, what also stinks is that this benefit is temporary. In fact, it is set to expire at the end of 2012. Now, it being an election year and with the housing problems around the country still lingering, it’s very possible the act will get extended. However, most people thought the tax credit for first time homebuyers would be extended too, but that went away. Point being, you have a limited amount of time to act on this very beneficial government incentive to short sale your home, something in which we specialize.
Remember that debt restructuring has become a Sysphean task to undertake, so much so that even the law firms that advertise services for it are quick to disclaim a low success rate. Short selling is the better answer.