Property Tax Information
Tax Relief Act For Short Sales and Foreclosures In Effect Until 2014
Originally passed in 2007, the Mortgage Debt Relief Act gives homeowners who short sell their property the opportunity to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage refinancing or loan modification, as well as mortgage debt forgiven in connection with a foreclosure, qualifies under this act as well.
The Mortgage Debt Relief Act originally applied to debt forgiven between the calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible under this act, or $1 million if married filing separately. This will not apply if the forgiveness of debt is due to services performed for the mortgage company or lender, or any other reason not directly related directly to a decline in property value or the homeowner’s financial status.
How Does the Mortgage Debt Relief Act Affect Someone Facing Foreclosure?
In a nutshell, if you are upside down on your mortgage and are potentially facing foreclosure, you will not be liable for the taxes due on the difference between the final selling price of your home, and your home loan amount (provided the loan amount is larger than the selling price of your home), if you short sell your property.
Remember also that the benefits of short selling rather than allowing the bank to foreclose on your property are rather sizable They include:
- No out-of-pocket costs normally associated with the sale of your home including realtor commissions, title fees, escrow fees and closing costs.
- The ability to purchase a home much more quickly (as little as 2 years) under qualifying conditions versus 7 years if you allow your home to fall into foreclosure.
Questions about the Mortgage Debt Relief Act? Contact us now!
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Capital Gains Rates to Remain the Same
There has been some misconceptions as to whether the capital gains tax rates will change under the “Fiscal Cliff”
negotiations. As of now, they have remained the same. In other words, capital gains rates of up to $250,000 for single persons, and $500,000 for married persons are exempt from taxation under the current law that was enacted during the Clinton Administration. This means that if a married couple sells a property, up to $500,000 of the profits from the sale of that home are tax exempt*.
*It is always best to consult your tax professional with regard to any questions regarding how taxes are applied to your finances.
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If you are a homeowner, you may have received a solicitation in the mail for companies that will help you obtain a tax reassessment on your property. First of all, what is a tax reassessment?
Basically, a tax reassessment pertains to the amount of property tax you pay on your property. If your home loan is higher than the value of your property, or if your property’s value has decreased since your last tax bill, you can request a reassessment of your property to try and lower the amount you pay in property taxes. This is something that any homeowner can do fairly easily.
However, there are companies out there who will solicit homeowners to offer to help obtain a property tax reassessment for a fee. While this practice is technically legal, there seems to be no regulation in what these companies may charge for their service, or what sort of guarantee their service offers.
Again, this is something that homeowners can do for free without being charged a fee from so-called Property Tax Reassessment companies.
Team Montemayor will gladly help answer your property tax reassessment questions and even help you obtain the information you need to file your own reassessment at no charge. Feel free to contact us at 661-510 2789 or 661-290-3802, or visit http://bringingyouhomescv.com for details.