Tax Relief for a Short Sale
Tax Relief
I heard a comment about the governments Tax Relief Act for homeowners after a short sale that surprised me. The comment was that if there is no penalty for doing a short sale that every one will do them and it will end up costing everyone. What is the damage to every one if the homeowner files bankruptcy? They may keep their house, but they have thousands upon thousands of dollars in other debt that they don’t pay, doesn’t that cost everyone? What about someone that just leaves? They pack up and walk away, some don’t even pack they just leave. They make no effort what so ever to keep their home or anything else. The lender has no other choice but foreclosure. The house is left sitting, open to vandals, the weather and other problems that will affect the value of the house when it is sold at auction or cost money to repair the damages. Some people just sit and wait for the lender to foreclose; others do not know that there are other options open to them. I don’t think the majority of these people just want to uproot their families and move. There are usually extenuating circumstances that can’t be overcome immediately, such as a death of one of the providers, a loss of employment with no foreseeable income to replace it, medical bills, or just too much debt. It is too easy to say that they should not have gotten into the situation in the first place. Maybe not but it has happened and there should be a way out with out losing everything. There are a million different reasons, and a lot of finger pointing and blame placing about all of the foreclosures in this country. It doesn’t take but a couple of months of missed payments to really put someone in a situation where they cannot see another way out. Some have tried other ways and end up being in a worse situation than they were before due to all of the scams. A short sale is not as easy as it sounds and the homeowner is not walking away free and clear. There will be consequences, now they have to find some place else to live, which won’t be easy and a short sale will affect their credit. Paying taxes on money that you did not have in the first place does not make sense. I am not a lawyer but it is my understanding that this new law is not going to give relief to flippers that have flops, or investors that over financed, or even homeowners that leveraged up their loans after acquiring the house. It is intended to give some relief to homeowners who are upside down on their mortgages and can no longer meet the payment requirements.
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