22
Nov
11

Taxes on Short Sale vs. Foreclosure

The key legislation that protects most homeowners from the IRS & California Franchise Tax Board tax consequences sunsets in 2012.  That’s only 405 days away!  OK, stop laughing.  405 is not a lot when you consider that “U.S. homeowners in the foreclosure process were an average of 507 days late on payments at the end of last year”*.  The only thing worse than losing your home, is losing your home and then getting taxed on the shortage as a gain.  In California, a $100K gain (a.k.a. the shortage on your loan) could create a $34K tax bill.

If you are hopelessly underwater, it may be better to consider your options now vs. later.  2012 is just around the corner.

For answers to your questions about this article or other real estate questions, you can contact me at reo@deansouza.com or call me direct at 510 -888-3322.

Bye for now!

Dean Souza

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Dean Souza

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