When the economy was in better shape before the downturn “forgiven debt” on home mortgages could be taxable income. So for example if you did a short sale on your Fountain Hills home or received a loan modification for less than what you owed on your loan, the remaining difference would be taxed as income.
Let’s say your Fountain Hills home sold or the loan was modified for 75,000 less than what you owed, you would be left owing taxes to Uncle Sam on the $75,000. Back in 2010 Congress passed a bill to forgive the debt, but as of Dec 31 2012 the Debt Relief Act is set to expire.
This hardly seems like a good option for struggling homeowners to be burdened with this tax. The reason they are doing a short sale or modification in the first place is because they have a hardship and can no longer afford to pay on their home loan. This to me is a no brainer, it doesn’t make much sense to add more financial stress to the equation. Where is the money suppose to come from?
President Obama’s budget proposal does include the extension to be extended to 2015 but nothing has been done as of yet. Keep your fingers crossed!!
Do you have questions about Fountain Hills real estate? I would love to talk with you! For a quick response, you can contact me at 480 888 6708 or email me regarding Fountain Hills neighborhoods, price trends, short sales, etc. I’ll get back to you ASAP!