Tax Consequences of Short Sales
Did you know that doing a short sale can result in thousands of dollars in tax debt to the IRS/State?
In 2010 alone, more than 3 million foreclosures were expected to take place. In an effort to avoid becoming yet another statistic, more and more Americans are resorting to what is known as a short sale.
A short sale is a process which allows upside down homeowners (upside down is a term that defines a mortgage that is greater than the value of the property it underwrites) to sell their real estate for less than what is owed on the mortgage loan without incurring considerable damage to their credit score. Provided the lender agrees to the terms of the short sale, the proceeds from the short sale are then forfeited to the lender.
Benjamin Franklin said it best, the only things certain in life are death and taxes and depending on when the short sale of your property is completed, the IRS/State may view your newfound debt forgiveness as taxable income. Whatever sum of money acquired from the short sale could be subject to taxes before it is attributed towards the remaining mortgage debt. This could very well result in a shortfall, which would, in all likeliness, incur further penalties for breaching the terms of the short sale. Essentially, the strategy behind the short sale process is somewhat negated.
With your home liquidated and your debt still outstanding, you are probably thinking to yourself, is there anything I can do to protect my short sale from taxes? The answer is yes, of course! Contact the experienced tax professionals at Tax Group Center today and find out how you can protect your debt forgiveness from taxes. No matter the means, whether the debt forgiveness was garnered by way of loan modification, strategic default or the aforementioned short sale, the qualified tax professionals at Tax Group Center will help protect you from incurring IRS/State penalties and their repercussions. When dealing with taxes, processing the correct tax forms makes all the difference in regard to your finances. If a short sale is in your near future, make sure you reap the full benefits of the transaction. Save yourself the time and the aggravation and let Tax Group Center offer their services.
Preserve what is rightfully yours and make a strong first move towards recovery.