Short Sales - Good news for sellers, income tax break extended

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

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Homeowners who had short sales in 2014 can now breathe a giant sigh of relief, as the Mortgage Debt Forgiveness Act was signed into law by President Barack Obama.

Yes, take a deep breath.  When a home being sold is "underwater," that is the amount of the mortgage is greater than the value of the property, the mortgage holder must reduce the amount it is willing to accept in full payment of the mortgage.  The resulting difference between the actual mortgage balance and the amount the lender is willing to accept is called "forgiven debt" and in most circumstance is considered income to the person who received the reduction.  As a result, a seller who "short sells" is home has to recognize that income. 

The newly signed law extends existing protections to short sellers and exempts the forgiven debt from being calculated as income.

You can read more about it here. 

Good luck!

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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