If I Short Sale My Property Will I Owe Taxes On It?

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Many of you are just beginning to consider doing a short sale on your home. If your mortgage is underwater and you feel there are no other options short of allowing the bank to foreclose on the property, a short sale may be the perfect solution. But along with this solution comes some important questions – particularly having to do with taxes.

Will you have to pay taxes on the money you are forgiven from repaying on a short sale?
For the most part, the answer is no. 

If you sell your home, the short sale is approved by the bank(s) and the property makes it to escrow and closing by the end of this year (December 31, 2012) then there is a good chance you will not owe any taxes on that forgiven amount.

Also for the money that is being forgiven, or discharged, if it was entirely used only to purchase the property rather than used as funds you accessed through the equity on your home so that you could spend it elsewhere, then there is a good chance that you will not pay taxes on it.

Rental properties for the most part are also not taxed through the end of this year if involved in short sales.

The important thing to remember is this: every situation is unique and each property has aspects to it that will likely not be like any other short sale situation. For this reason, the best way to truly confirm whether you will owe any taxes on your short sale is to meet and consult with a Certified Public Accountant. If you would like some references for CPAs in our local area, we would be happy to provide them.
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If you would like guidance, advice or even if you would like simply to review your options – contact us today. We look forward to helping you!

There are two websites where you can get more information and find out if this program is right for you:

www.LasVegasShortSaleHelper.com
www.StayorShortLasVegas.com

Worried About What Your Neighbors Will Think If You Short Sale Your Home?

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Two words: don’t be. Here’s the thing. On the one hand you may be concerned with how it may look if and when the neighbors find out you are short selling your home – but on the other hand, you are dealing with one of the most difficult situations you will likely have to face.

There are two websites where you can get more information and find out if this program is right for you:

www.LasVegasShortSaleHelper.com
www.StayorShortLasVegas.com

So how do you get over the fact that everyone you have lived with in the neighborhood will soon enough know your mortgage is under water? You focus on what is really important; you. 

Having said that, it is worthwhile to know that while neighbors might prefer a conventional sale over a short sale – they would MUCH rather have a short sale in the area as opposed to a foreclosure. This is because of the typical types of activity you might expect to see happen in a foreclosed home. A vacant home might attract vandals, sit there for who knows how long and ultimately drag neighborhood home values down.

Your short sale, which you can explain to anyone that asks, is a viable alternative that not only keeps the values at market level but also maintains an owner-occupied status of the home. The key here is to use a real estate agent that knows what they are doing. You could fall into the trap of dealing with a real estate that is less experienced in short sales. We see homeowners falling victim to those inexperienced agents that advise underpricing the home to “attract multiple offers”. THAT is what might set your neighbors off a bit.

So the next time you have any qualms about how others may perceive your much-needed short sale, direct all your energies toward the fresh new start you can get without damaging your credit or your reputation nearly as much as a foreclosure would.

As always, please feel free to call us, email or walk right into our office if you would like a one-on-one discussion about your real estate needs. We look forward to hearing from you!