There are some benefits to short sales for San Diego Foreclosures. In many cases, banks are willing to accept a short sale to avoid taking on the burden of the San Diego Foreclosure auction or another REO property.
Although a short sale does have debt relief benefits, it also has some tax relief provisions that must be considered.
Under the Mortgage Debt Cancelation Tax Relief law (H.R. 3648), the follow provisions apply to San Diego Short Sale Homes:
• Mortgage Debt Relief is not based on income. All short sales qualify for consideration.
• Only two million dollars of the short sale qualifies for the exclusion for San Diego home sales. (one million if a couple is married filing separately)
• The Mortgage Debt Cancelation Tax Relief law only covers a primary home residence.
• The mortgage in consideration for debt cancelation must have been secured by the current San Diego home buyer.
• Cash outs of any kind, including refinancing a first or second mortgage, home equity line of credit, are not included in debt cancelation tax forgiveness relief.
There are some exceptions to the Mortgage Debt Cancelation Tax Relief law (H.R. 3648) termed as “acquisition indebtness” that qualify such as:
• Refinanced debt that does not exceed the original mortgage amount of the San Diego home
• Second mortgages or home equity lines of credit used for home improvement purposes
Cash outs for short sales of San Diego homes never qualify
Some additional provisos for short sales seeking tax relief for their mortgage debt forgiveness to consider about Mortgage Debt Cancelation Tax Relief law (H.R. 3648):
• Refinanced Mortgages on San Diego real estate: Tax relief for short sales does cover refinanced debt in cases where the debt is directly related to the improvement of this San Diego home or acquisition of this as a primary residence. Any moveable property associated with the San Diego home (such as furniture or dishes) do not qualify for mortgage debt tax relief.
• San Diego home as a Principal Residence: The principle residence for a San Diego home is the primary place of occupancy. At given time, if a San Diego house is not legally reported as a primary residence for a short sale, then the San Diego home mortgage debt is not eligible for tax relief.
• San Diego homes qualifying as a Second Home: In the case where the San Diego home is used as a rental or lease property, provisions might apply to incur forgiveness for some of the tax debt.
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