The New Year is around the corner

Seeing that the New Year is around the corner, I would like to say thank you to sixty plus clients that allowed The Smith Team to successfully market, negotiate and close their Short Sales in 2011! That is sixty plus families that can move forward and put this year and times behind them!

Next year there may pose an issue that effects Sellers in a Short Sale.If the law is extended to forgive capital gains on Short Sales for primary homeowners then this can be put aside.If Congress continues to not get along and it is not passed then please pay attention to the following.This has been provided by my brother, Robert D. Smith, a licensed CPA for over the past 14 years.

The time to act now regarding the short sale of your property is now! The Mortgage Forgiveness Debt Relief Act of 2007, enacted December 20th, allows taxpayers to exclude debt forgiven on their personal residence if the balance of their loan is $2 million or less. Legislation enacted in October 2008 extends this relief through 2012. There is no guarantee that this will be extended past 2012, so act now to take advantage of avoidance of debt forgiveness as income. (The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions)

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. This is good news if your short sale involves a property other than your primary residence. The definition of insolvency: you are insolvent when your total debts are more than the fair market value of your total assets. For many investors, the significant decline in Las Vegas home values has made them 'insolvent' and thus they can take advantage of a short sale without tax consequences due to debt cancellation! It is important to consult with your accountant or CPA to determine if your total debts exceed your total assets.

In summary, act now to take advantage of the mortgage debt relief from short sales to be NOT included in income. This can save you from a significant tax liability! Even though personal residences qualify (within the loan dollar limits) under the The Mortgage Forgiveness Debt Relief Act of 2007, many investors can also take advantage of no tax liability on debt cancellation due to insolvency.

Thus said, it takes anywhere from 2-6 months plus to sell a home under a Short Sale.It may take longer based on the amount of loans, who the bank(s) are and if the home sells once, twice or three times!!!If a Short Sale is something you wish to do, then the first of the year is the time to get started. Please feel free to call or email me with any questions.

Robin I. Smith
The Smith Team
www.smithteamlasvegas.com
Robin@Smithteamlasvegas.com