If you know someone who is upside down or owes more on their property than it is worth of residential real estate, NOW is the time to really take a close, hard look at the law that has saved millions of homeowners over the past several years: the Mortgage Debt Forgiveness Relief Act that expires on January 1, 2013. Federal and California state guidelines are listed below.
For anyone you know in a modification, I strongly suggest you have your agreement reviewed ASAP with a real estate attorney if you haven’t already. For a referral, I can help; I keep in contact with several top-quality attorneys and accountants. The modification agreement in place may circumvent the Mortgage Debt Forgiveness Relief Act–causing liability for the difference of the home loan on your property of what it is worth, whether you let your home go to foreclosure, or sell the property as a short sale now or after this law expires this year.
Mortgage Debt Forgiveness Relief act
Please do yourself, friends, and family a favor–YOU will always be remembered as the knight in shining armor to them if you help them out. And I can always help to answer any questions about this Mortgage Debt Forgiveness Relief Act and the effect it will have on you and them once it expires. Since short sales can take several months to process in some cases, immediate action is necessary, and with that a financial windfall is possible–even if there is no equity in your property. Call me now for details–(619) 890-3648!
Below you will find some of the details pertinent to the Federal and California government laws, but there are others as well (not noted here) that will also be expiring. I am here to help!
New law–Taxable years 2009 through 2012
California law conforms, with modifications, to federal mortgage forgiveness debt relief for discharges that occurred in the tax years of 2007 through December 31, 2012. The amount of qualifying indebtedness is less than the federal amount, and California imposes a state-only limitation on the total amount of relief excluded from the gross income. The following summarizes the differences between the Federal and California provisions.
Federal provision applies to discharges occurring in 2007 through the end of 2012, and:
- Limits the amount of qualified principal residence indebtedness to $2,000,000 for taxpayers who file as married filing jointly, single, head of household, or widow/widower, and to $1,000,000 for taxpayers who file as married filing separately.
- Does not limit the debt relief amount; it only limits the indebtedness amount used to calculate the debt relief amount.
- See the Federal law: Mortgage Forgiveness Debt Relief Act and Debt Cancellation for more information.
California provision applies to discharges that occurred in 2007 through 2012, and:
Taxable years 2009 through 2012
- Limits the amount of qualified principal residence indebtedness to $800,000 for taxpayers who file as married/registered domestic partners (RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
- Limits debt relief to $500,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, and to $250,000 for taxpayers who file as married/RDP filing separately.
Taxable years 2007 and 2008
- Limited the amount of qualified principal residence indebtness to $800,000 for taxpayers who file as married/(RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
- Limited debt relief to $250,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, ad to $125,000 for taxpayers who file as married/RDP filing separately.
You can read more about the Mortgage Debt Forgiveness Relief Act and Debt Cancellation via the IRS website.
If you’re confused still about this law, or need help getting the ball rolling NOW–please give me, John A. Silva, a call. I would love to help sort this all out for you and save you headaches in the future–call me! (619) 890-3648
