Short sales must close by December 31, 2012 or sellers will have to pay taxes to IRS

Posted by on Sep 23, 2012 in Blog | Comments Off on Short sales must close by December 31, 2012 or sellers will have to pay taxes to IRS

Ladies and Gentlemen:  As most of you may know, we handle short sales at no cost to the realtors or to the sellers.  To that end, I would like to remind everybody that the Mortgage Debt Relief Act, which provides sellers with a tax exemption for short sales on primary residences, expires on December 31, 2012.  This means that if the sellers do not close their short sales by that date, they will have to pay taxes on the bank’s losses.  This can translate to tens of thousands of dollars of tax liability to the IRS by the sellers.  Please make sure to remind your clients of this.  Many sellers keep trying to modify their loans always thinking that they will short sale if the modification does not go through.  This is the time, however, for them to make a decision to short sale before the Debt Relief Act expires on December 31, 2012.  Please note that although many people are pushing for this law to be extended, it has not happened and sellers are now running out of time to do their short sales. Finally, please do not hesitate to contact our office if you would like for us to process your short sales.  Thank you.