By far the biggest news in real estate so far this year happened a few weeks ago as a part of the “fiscal cliff” negotiations.
Congress agreed to extend the Mortgage Forgiveness Debt Relief Act for another year. This is huge, and will help millions of home owners.
When a loan modification or a short sale is negotiated with a mortgage lender, including a principle reduction or a foreclosure, the homeowner was still responsible to pay taxes on the difference as if it were income.
With the extension of the Mortgage Forgiveness Debt Relief Act for another year, people in the middle of a short sale, foreclosure, loan modification or principle reduction don’t have to worry.
Those who may have been on the fence about taking one of these actions should jump into action. The process can take almost a year in some cases, and a reprieve has been granted.
There is also something called “Peace Limitations” in this agreement that reduced the value of itemized deductions and have been permanently repealed for most taxpayers but will be reinstituted for high income filers. This will affect individuals earning more than $250,000.00 and joint filers earning more than $300,000. Because of inflation, these have been indexed and will increase with time. Value of itemized deductions for filers gradually loses value up to a 20% reduction.
Luckily the capital gains rates remain, continuing to be $500,000 for married couples and $250,000 for single taxpayers.
Please always refer to your tax professional for explanation of current tax codes.
With new pressures for the banks to speed up the foreclosures process and the continuation of the Mortgage Forgiveness Debt Relief Act, the hope is that we will see a slightly better inventory with more options in San Diego.
Our market continues to have a low inventory and rising prices. Short selling is a difficult choice but there is no shame in making a tough decision that is the best decision for your future. If you think it might be a decision for you, do it this year while the forgiveness is in place.
Realtor Bo Bortner offers his sound advice and personal knowledge of the industry as a successful agent with Team Metro Real Estate. He is well-versed in Hillcrest, North Park, University Heights, Mission Hills, Golden Hill and downtown, but his clients come from all over. He gives back to the community through his involvement with Mama's Kitchen, The Trevor Project and University Christian Church. He can be reached at (619) 840-2981 or online at his website.