${site.data.firmName}${SEMFirmNameAlt}
A Global Tax Law Firm
954-900-9107

Tax Obligations on the Short Sale of a Florida Property

Ordinarily relief from indebtedness is taxable as income under the Internal Revenue Code. However, The Mortgage Debt Forgiveness Relief Act of 2007 was passed to benefit certain taxpayers, and excludes from income debt forgiven in the years 2007 through 1012. This may encompass up to $2,000,000 in debt forgiveness. One of the ways you may qualify for this tax benefit is through a short sale on your home. There are a variety of factors to consider in determining whether you may benefit from this tax act.

In a short sale, the lender agrees to accept less than the total amount due under the mortgage. However, not all owners or all properties qualify. In general, the following conditions must be met in order to qualify for a short sale:

1. The market value of the property has dropped less than the unpaid balance due to lender;
2. Mortgage is in or near default status;
3. Seller has fallen on hard times (does not include bad purchase decision,buying another home,moving into apartment etc.) (does include unemployment, divorce, medical emergency, bankruptcy, death); and
4. Seller has no assets (if assets, the lender may deny or may approve it on the condition that seller later pay back the difference).

In addition to the above qualifications, a purchaser must be found and, most importantly, the lender must agree to sell the property in a short sale. It is important to note that the seller does not have to be in default before a lender will consider the short sale. Lenders may consider this course of action if the seller is current, but the value of the property has dropped substantially.

Short sales have practical, legal, and tax ramifications including, but not limited to the following:

1. A short sale will show up on the person's credit report and drop his/her FICO score. Sellers can ask that the lender not report the adverse action to the agencies, but it is up to the lender.
2.The lender could potentially still seek a deficiency decree for the unpaid balance; and/or
3. The IRS could potentially consider the debt forgiveness as income. However, the passing of the Mortgage Forgiveness Debt Relief Act of 2007 should greatly reduce or eliminate this concern.

No Comments

Leave a comment
Comment Information
  1. AVVO Client Choice
  2. AVVO Avvo Rating
  3. AV Preeminent
  4. BBB | Accredited Business BBB Rating: A+
  5. Rated by Super Lawyers | Christin M. Bucci | SuperLawyers.com
  6. ABA
  7. Florida institute of certified public accountants | CPA
  8. The Florida Bar | 1950
  9. Seal of the Supreme Court of the United States of America
  10. United States Tax Court
  11. The Ohio Society of CPAS | CPA
  12. AICP
  13. Avvo | Clients Choice  Award 2012 | Christin Marie Bucci | Five Stars
  14. Reviews | Five Stars | out of 16 reviews | Christin Marie Bucci | Avvo
  15. Avvo Rating 10.0 | Christin Marie Bucci | Top Attorney
Bucci Law Offices

Fort Lauderdale Office
2600 North Andrews Avenue
Fort Lauderdale, FL 33311

Toll Free: 800-743-4263
Phone: 954-900-9107
Fax: 954-764-4401
Fort Lauderdale Law Office Map

Miami Beach Office
1130 Washington Avenue
3rd Floor, Suite B
Miami Beach, FL 33139

Toll Free: 800-743-4263
Phone: 305-340-2275
Miami Beach Law Office Map

Email Us For A Response

Get Help With Your Tax Matter

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy