Short sales in South Florida have drastically reduced in a year-over-year comparison. We’re inclined to say that this is a good sign for the Florida real estate market. However, we cannot commit to this theory while we wait for the Mortgage Debt Relief Act to be renewed.
The act allows homeowners with underwater mortgages to list their homes for sale at a price below what they currently owe on their mortgage without tax penalty. It allows homeowners to sell their homes at market value even if they owe more than the market value amount of the home. The amount forgiven by the bank is not considered income for tax purposes under this act.
With the act currently pending approval it is possible that short sales are not a viable option for those who can’t afford the tax burden. For many the amount forgiven can fall upwards of $50,000 and the tax could be catastrophic.
Luckily short sales aren’t the only solution to escaping foreclosure, if you can’t afford your home and don’t want to wait for the approval of the Mortgage Debt Relief Act our South Florida foreclosure defense team is here to help.
At the moment we’re standing by as the senate reviews the bill to extend the act for two more years, starting retroactively from expiration of the act in 2013. It’s understandable that many homeowners are reluctant to process short sales until it is reenacted. If you’re having difficulties making your mortgage payments, our South Florida foreclosure defense team can represent your foreclosure until you’re ready to list it as a short sale.