Junell Realty Group

Real Estate and Homes for sale in Carson City, Reno & Sparks, NV

(775) 432-6300

  • Home
  • 55+ Senior Living
    • Senior Living [Home]
    • Where to Move?
    • Rightsizing Simplified
    • Types for Retirement Living Options
    • Local Retirement Communities
    • Why Turn To Us?
    • Testimonials from Seniors
    • Seminars for Seniors (Free)
    • Video Library
    • Downsizing Made Easy
    • RESOURCES
  • Sellers
    • Selling Your Home
    • Getting Your Home Ready to Sell
    • Marketing Your Home
    • Your Homes Value
    • Seller Testimonials
    • Short Sale Help
    • For Sale By Owner
  • Buyers
    • Search for Homes
    • Download Our Mobile Home Search App
  • Free Seminars
  • What Clients Say
  • About / Contact Us
    • Our Mission, Vision, Values, Beliefs & Perspective
    • About Us
    • Contact Us
    • Office Directions
  • Media
You are here: Home / Blog / Are Short Sale tax exemptions about to expire?

Are Short Sale tax exemptions about to expire?

Under present legislation, any debt forgiven by a lender in a short sale, loan modification, or foreclosure is exempt from federal taxation.  However, this exemption is scheduled to expire Jan. 1, 2013.

If the government allow the currently exemption to expire, borrowers will have to count mortgage relief from lenders as income on their federal tax returns, That means, for example, a borrower would have to pay taxes on a $100,000 reduction in principal owed on a loan, or taxes on a $20,000 write-off in the amount owed after a short sale.

Hopefully, an extension of the tax exemption – established under the Mortgage Forgiveness Debt Relief Act of 2007 – is a strong possibility.

However, given that Congress now has to grapple with serious fiscal issues with the election now behind us, there is no guarantee the exemption will emerge from those negotiations intact.

The Debt Relief Act exemption applies only to canceled mortgage debt used to buy, build, or improve a primary residence, not a second home.  The maximum exemption is $2 million. Reinstating the tax would undercut the the effect of the National Mortgage Settlement reached earlier this year in the federal government’s investigation into banks’ mishandling of foreclosure documents.

Under the terms of the settlement, five of the biggest mortgage lenders must put some $17 billion toward debt relief that enables borrowers to stay in their homes. Smaller portions are reserved for short sales and refinancing.  Even so, there will still be many borrowers who will still find themselves doing a short sale or being foreclosed upon.

Hopefully both the Federal and State governments can pass the necessary legislation to extend so families don’t end up with a large tax bill on top of loosing their family home.

Filed Under: Blog, Short Sale Tagged With: Short Sale

Upcoming Seminars

  1. The Truth about Downsizing & Simplifying

    April 22 @ 10:00 am - 11:30 am
  2. The Truth about 55+ Senior Living Options

    May 20 @ 10:00 am - 11:00 am

View All Events

Take our Mobile Search App with You

Downsizing Made Easy


5 Step Guide to Downsizing

Sponsored by Junell Realty Group

Copyright © 2020 · Junell Group · All Rights Reserved

Keller Williams Group One, NV · License #'s: BS.0144703 & BS.0144705

Return to top of page