What are the taxes of short sales?

Short sales taxes are charged to home owners who sell their home to the buyer for less than the amount owed for their mortgage. This process is known as a short sale and the mortgage creditor generally forgives the remaining debtor's debt. The forgiveness of the debt is considered to be the income of the debtor, which is subject to short sales tax. In the United States, Congress gave some relief to those homeowners who made a short sale of their primary residence, allowing the removal of the tax for forgiveness of up to $ 2 million (USD). If the home is confiscated, the owner's credit rating will be such an intervention that the purchase of a house in the future can be impossible. Short sales are often beneficial for all parties. The debtor leaves the debt while the creditor has less financial intervention forgiven debts than it would be from the cost of closing the market. However, homeowners must be aware of the short sales tax before the process.

In principle, short sales taxes are stored because the debt relief is considered to be a form of income. Homeowners who do not know it could be difficult to pay taxes when they are collected. The creditor generally provides the tax form to the debtor when performing a short sale, which gives details of the debt forgiveness.

For an example of how short sales taxes work, imagine that the house owner owes $ 750,000 USD for a mortgage. With the creditor's consent, he manages a short sale to the buyer willing to pay $ 600,000. The creditor agrees to the forgiveness of the debtor's debtor, which is $ 150,000 to prevent the market from closing. The debtor could therefore be taxed a usable rate for $ 150,000.

In the United States, a law on forgiveness of the forgiveness of the mortgage from 2007 known as the Mortgage forgiveness Act as a method of assistance to fighting homeowners was introduced. The law that has been extended until 2012 allows liberation from DAIt is forgiven by a debt of up to $ 2 million. One of the qualifying factors of this exception is that the house must be considered as a residential property of the owner of a short sale. This eliminates those who have non -residential properties such as hotels, exemption from short sales taxes.