Do you want to complete a Venice short sale but are concerned about the tax ramifications when you file next year? If you act fast and get your Venice short sale completed before December 31, 2013 you may be able to avoid the tax consequences altogether. If you’re not familiar with the short sale process you must be wondering why you would have to pay taxes on a Venice short sale to begin with; we’ll tell you why. When you complete a Venice short sale the difference between what you sell your home for and what you owe the bank is known as the forgiven amount. The IRS views this forgiven amount as taxable income for one reason or another and because of this you are responsible for paying taxes on it; if your forgiven amount is in the thousands of dollars, you would have to pay quite a bit out of pocket at tax time.
The good news for those seeking tax relief is that the Mortgage Forgiveness Debt Relief Act is in effect through the end of the year. The MFDRA provides tax exemption to those homeowners that complete a Venice short sale on their primary residence as long as the forgiven amount is below a certain threshold. A majority of homeowners that complete a Venice short sale are eligible for the MFDRA so if you fall into this category we’d like to encourage you to get your Venice short sale underway because it has to be completed by the end of the year.
Of course, there are always other ways to avoid paying taxes on the forgiven amount of your Venice short sale but they are much harder to qualify for. The MFDRA is pretty cut-and-dry when it comes to qualifying so contact your Venice short sale expert today to see if you qualify and, if you do, get the process started to take advantage of this tax relief today.