If you are considering a Tucson short sale but concerned about the potential tax consequences there is good news for you. Thanks to an extention from Congress distressed property owners may be able to avoid the hefty tax bill that can be associated with your Tucson short sale. However, this extension is only until the end of 2013 so it is important to act fast in order to take advantage of this incredible opportunity.
The Mortgage Debt Forgiveness Relief Act was passed by Congress under President Bush and has already helped thousands of homeowners save thousands of dollars. When a homeowner completes a Tucson short sale the debt that is forgiven is considered to be income. This will require the IRS to issue a 1099 to the homeowner when it comes time to pay your taxes in April. If you are like many homeowners who bought your home at the top of the market over the last five years the amount of debt forgiven can be substantial. Many homeowners have seen over a hundred thousand dollars in debt forgiven thanks to their Tucson short sale. While this is certainly great news it can also creat an enormous tax bill. If you are in a situation to complete a short sale you may not have the extra cash laying around in order to sustain this tax hit come April. It is unfortunate that this tax situation has stopped many homeowners from taking advantage of a Tucson short sale but this relief has certainly helped. On average a short sale will take three to four months to complete in Tucson. Given the Mortgage Debt Forgiveness Relief Act is set to expire at the end of 2013 it is important to act fast in order to cash in on this program. President Obama has already extended this program one year but there is no guarantee another extension is coming.
If you find yourself in need of a short sale make sure to get educated on all of your options for short sale incentives when considering your options. You may be able to walk away from your distressed property with cash in your pocket and a much lighter tax bill than expected.