Is Your Huntsville AL Real Estate Underwater? Read This!
The race is on to finalize short sales and seal the deal on mortgage reductions as the December 31st expiration of a massive tax break for struggling owners of Huntsville AL real estate looms.
Since 2007, homeowners whose banks have forgiven unpaid mortgage debt after a short sale, principal reduction, or foreclosure have not been required to count that money as income on their tax returns. But the end of the federal Mortgage Forgiveness Debt Relief Act will mean that borrowers, who have been spared tens of thousands of dollars depending on the amount forgiven and their tax bracket, may be faced with very large IRS bills after losing their home. Bottom line: unless lawmakers extend the Act, the IRS in January will treat any unpaid mortgage debt as taxable income for many borrowers.
The exemption, which can be as much as $2 million per household, covers owners of Huntsville AL real estate who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for less than the outstanding loans), or participate in a foreclosure process. While an extension of the tax exemption would appear to be a common-sense means to help stabilize the housing market, the current political turmoil around the fiscal-cliff negotiations means common sense may not win out.
Although a bipartisan vote in the Senate Finance Committee approved the extension in August (Family and Business Tax Cut Certainty Act of 2012), opponents decry its cost -- an estimated $2.7 billion over the next two years -- and describe it as a reward for bad behavior, in effect implying that it lets the owners of Huntsville AL real estate off easy for buying more house than they could afford. Proponents of the extension include 42 state and territorial attorneys general who petitioned Congress to that effect in November.
Even if Congress cannot extend the mortgage relief exemption before the end of this year, many observers note that a deal in 2013 could still be possible and could apply retroactively. However, the heightened uncertainty would deter some underwater homeowners from selling their homes before the issue is resolved, thus negatively affecting the housing market recovery.
Having lived in the Huntsville AL area for most of his life, Mike Manosky understands exactly what makes this community special. In fact, those who know him well will tell you he carries the same traditional values and focus on the future as Huntsville.
Mike brings with him a keen eye for the details of buying or selling a Huntsville AL home and seemingly boundless determination and energy, which is why his clients benefit from his unique brand of real estate service. Rooted in Tradition, Focused on the Future - Mike Manosky will help make the most of your Huntsville AL real estate experience. Give him a call today, 256-508-0211 Direct or 800-803-0053 Toll Free, and discover the difference he can make during your family's move.