Tampa Real Estate Attorney
Investors in houses and flats in Tampa Florida with large debts are facing foreclosures on their properties and are seeking ways to release themselves from paying huge mortgage payments for buildings which are not worth that much. Short sales was offered as an option to people with houses to get rid of debt by entering into an agreement with lender to sell a property and give the proceeds to settle the debt. The amount is accepted by the lender as full settlement who then forgives the remaining shortfall on mortgage as the homeowner is going through a financial crisis.
See also: Short Sale Process
Shorts sales for homes in Tampa Florida are a lengthy process as debtor has to go through several meetings and discussions with the lender to show his/her financial status and sign required legal documents. Since the home is sold at a rate which is lesser than mortgage amount the lender uses their access to the debtor’s bank account to deduct amounts which it feels is owed for taking care of legalities and paperwork. Since every property sale is considered an income the IRS charges a sizeable amount on the shortfall amount between sale value and mortgage value which is regarded as income.
Mortgage Forgiveness Debt Relief Act of 2007-2012 – Before this act was passed and is now under consideration for renewal, homeowners who sold their homes under short sales in Tampa Florida, were liable to pay tax on sales of the house. But people who have sold their homes during the period this law was in force and have managed to get a 1099 tax form from their lender they need not pay any tax on the sales amount. However the Act protects only those homeowners who were staying in the houses they have sold to lender. If the house was bought for letting it out on rent or lease as an investment and owner had not stayed in that house for 3-4 years before sale then the entire income forgiven amount by lender is applicable for income tax.
Difficulty in Short Sale – With general slowdown in real estate markets across the nation, real estate owners are finding it hard to get buyers for their properties for engaging in short sale deals. Since the short sale tends to fall short of actual mortgage amount there are times when lenders are unwilling to go through the procedure. The procedure requires several details like tax returns, financial statements, and lenders acceptance before a particular can be listed for short sales. As per procedures of short sales in Tampa, Florida all deals have to be completed within 30 days of acceptance by lender of property sale to a buyer who has ready means to pay the right fee for the property.
Though the process is quicker than a foreclosure this short sales procedure is filled with dangers if the person is not aware of tax procedures that arise due to a transaction of this kind. According to real estate laws if the property sold was not being used as residence of debtor but was purchased as an investment then they may wake up to find their bank account cleaned out by the IRS.
If you have any questions about short sales Tampa Florida or would like to speak to us about your options, please contact us at (813) 518-7411 or complete a free online case evaluation.
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