Walk Away From A Tucson Short Sale Smelling Like A Rose!

Walk Away From A Tucson Short Sale Smelling Like A Rose!

A Tucson short sale answers many distressed homeowners’ desperate prayers for relief and cries for help. short sale advantages have become well-known during recent times. Tragically, many delinquent mortgage debtors never seek to resolve their dilemma by seeking assistance from a competent Tucson short sale Realtor, however.

A popular perception of attendant tax consequences is perhaps the main cause of such reluctance to initiate realty liquidations that avert imminent financial complications of the full foreclosure process.

Between a rock and a hard place

Lenders look the other way when short sale proceeds fail to fully satisfy the borrower’s outstanding loan balance. The IRS has historically regarded such debt forgiveness as a financial “windfall.” Accordingly, hapless former homeowners traditionally faced tax consequences after resorting to innovative win-win resolutions.

Legal loopholes in bankruptcy laws eliminate large foreclosure deficiency balances. Tax obligations are not so easily erased, however. Thus, many decide to face the “music” by personal bankruptcy declarations that immediately discharge large deficiency debts – instead of living with the prospect of the tax man’s deafening knock on the door.

Much Needed homeowner help Is Here

In 2007, Congress enacted the Mortgage Forgiveness Debt Relief Act (“MFDRA”). This progressive legislation has been a boon for delinquent mortgage borrowers. Consider the following example:

Eugene and Ursula Underwater currently owe an outstanding mortgage balance of $200,000. Recognizing the endemic harsh economic realities of the local realty market, Beleaguered Banker authorizes a short sale of the Underwaters’ residence. Net proceeds therefrom total $150,000. Usually, the Underwaters would face a tax bill of 10 to 35 percent of the $50,000 shortfall.

Thanks to the MFDRA, the Underwaters may simultaneously save their credit and avoid the lifelong fear of IRS tax implications.

“Make hay while the sun is shining.”

All good things must eventually end. Accordingly, the unprecedented abundance of public and private homeowner help won’t last forever. In fact, the MFDRA tax exemption for the sale of primary residences expires next year.

Thus, the message is clear for would-be market participants presently residing on both sides of the fence. To sellers, it says, “Get out while you can still exit gracefully.” To prospective Tucson short sale purchasers, it screams, “Get into your dream house for a song while the getting is good.” Tucson Realtor Peter Saavedra is both parties’ best source of professional assistance and expert knowledge about all aspects of the Tucson short sale process. For further information, visit www.petersaavedra.com.

Tucson Short Sale Specialists of Keller Williams Tucson are not licensed attorneys, accountaints or tax advisors. We recommend that all of our clients seek the advice of a certified professional to better understand your individual taxable situation.