Stay in your home - there is help if you know how to find it!
The Mortgage Forgiveness Debt Relief Act - What it means if you foreclose or short sale..
What it is - a way not to pay tax on the difference between what you owe and what the bank accepted either on a short sale or foreclosure.
Your lender calculates the difference between what you owe and the short sale or foreclosed price obtained at the sheriff's sale and calls it a GIFT to you. They will send out a 1099-C form, Cancellation of Debt, by January 21, 2008.
You, in turn, file form 982 to exclude this "gift" up to $2 million dollars as long as it is your principal residence.
In talking with the IRS today, they said the IRS doesn't care if it's a foreclosure or a short sale. End result is the same, same forms.
If you want to save your home, their advice was to call HUD - that there is money out there to refinance under a loan modification. Anything from reducing interest rate, payments and the actual mortgage amount. The HUD web page is: http://www.hud.gov/foreclosure/
For more information, visit this site: http://www.irs.gov/individuals/article/0,,id=179414,00.html
Your lender calculates the difference between what you owe and the short sale or foreclosed price obtained at the sheriff's sale and calls it a GIFT to you. They will send out a 1099-C form, Cancellation of Debt, by January 21, 2008.
You, in turn, file form 982 to exclude this "gift" up to $2 million dollars as long as it is your principal residence.
In talking with the IRS today, they said the IRS doesn't care if it's a foreclosure or a short sale. End result is the same, same forms.
If you want to save your home, their advice was to call HUD - that there is money out there to refinance under a loan modification. Anything from reducing interest rate, payments and the actual mortgage amount. The HUD web page is: http://www.hud.gov/foreclosure/
For more information, visit this site: http://www.irs.gov/individuals/article/0,,id=179414,00.html
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