For many San Diego Real Estate home owners facing tax consequences of short sale forgiveness off debt income foreclosure, the new Mortgage Debit Cancelation Tax Relief law may provide much needed relief to San Diego home owner’s tax burden. San Diego home owners may receive a tax break on debt forgiveness during the short sale. When a seller gets approval from a bank or lending institution to accept less than what is owned on the actual mortgage, then sellers could be relieved of the taxes on the amount forgiven by the bank for federal tax purposes. In many cases, a bank will agree to a short sale to keep from losing all opportunity recoup the value of the San Diego home in a foreclosure auction. Or, if there is already a surplus of San Diego foreclosures for a bank or the San Diego real estate market is slow, rather than take possession of the San Diego real estate, the bank will agree to a short sale to avoid adding more REO properties to their inventory. The new Mortgage Debt Cancelation Tax Relief law will give extra incentive for mortgage debt relief for San Diego foreclosures by deleting the taxation of the portion of the forgiven amount.
Under the Mortgage Debt Cancelation Tax Relief law (H.R. 3648), a short sale with authorization from the bank holding a mortgage helps relieve the tax debt load on the forgiven amount.
Note: There is no similar provision for forgiveness in California tax law.
The information is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been compiled from sources deemed reliable, please note that individual situations can vary and therefore, please consult your attorney for specific advice and legal counsel.
Tags: bank owned, bank owned real estate, buying san diego real estate, debt forgiveness, foreclosure, foreclosure auctions, home, home loan, Mortgage Debt Cancelation Tax Relief, mortgage debt relief, mortgage rates, real estate, real estate auctions, real estate owned, reo, San Diego bank owned property, San Diego Foreclosure, San Diego foreclosure home listings, San Diego foreclosure properties, san diego foreclosures, san diego properties, San Diego real estate, selling real estate, short sale, tax debt
