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Short Sale Information - FAQ
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| |  Country Home Real Estate Inc. Has Partnered with
ABBA LOSS MITIGATION,LLC
What is a short sale? A short sale happens when a property is sold for less than what is owed. The lender holding the mortgage agrees to take less than the mortgage payoff amount.
Many folks are finding themselves in a situation whereby they are unable to afford their mortgage payments. In that instance, a short sale may be a good alternative to a foreclosure.Reasons why people choose a short sale:
- Can be less damaging to one's credit than a forclosure
- Stops collection calls from the mortgage company
- Can save the embarrassment of having a sherif sign on the property.
- No foreclosure notice printed in the newspaper
- A short sale may take months to accomplish
- Being pro-active in resolving the matter is usually much less stressful than just letting a foreclosure happen
Short Sale - Frequently Asked Questions Question:
I have been told that if I sell my house for less than what is owed, my mortgage company will issue me a 1099 for the difference, and I will have to pay taxes on that. Is that true?
Answer:
In 2007, President George Bush issued the Taxpayers Debt Relief Act, which states that the homeowner will NOT owe the IRS taxes from a short sale 1099. (You will still receive the 1099 but with no federal tax implication.) This act has been extended and is in effect until 2012. Therefore, there is no federal tax liability associated with a short sale at this time. To obtain information regarding any state or local tax responsibility, please consult your accountant. Click Here to see what the IRS says about the Taxpayers Debt Relief Act.
Question:
Will I be responsible for paying the difference back to my mortgage company? (Will my mortgage company issue a deficiency judgment?) Answer:
Some mortgage companies will issue a deficiency judgment and expect the homeowner to pay back any amount that is owed to them after the sale; however, the amount is usually substantially less than the deficiency judgment that would be filed as a result of a foreclosure. It pays to do a short sale instead.
For legal advice on possible obligations after a short sale or foreclosure, please consult your attorney.
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