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Category: Housing in Tucson

Short Sales And Your Tax Liability

July 15, 2015

One of the most confusing topics when it comes to short sales is tax ramifications. There is so much misinformation and so many myths floating around out there as well as many people that think they know what they’re talking about when they really don’t. First of all, if you’re considering a short sale or a foreclosure one of the things to be aware of is that in both of these situations the lender will issue you a 1099 for their loss and the cancellation of your debt. Within the tax code there are a number of different things that you can read about on your own or ask your CPA about; because I’m a real estate agent and not a CPA I can’t tell you exactly what applies to you but I can make you aware that these things exist.

Number one, there’s an insolvency provision within the tax code that applies to about 85% of the people we help. It isn’t necessarily that you’re flat broke, but that at the time of the cancellation of debt your liabilities outweigh your assets. There is also a provision in the tax code that may or may not be treated as gain on sale depending on whether your home was a primary residence or not. One of the things that we offer to our clients is an attorney in the local area that is incredibly familiar with the tax code and how it relates to short sales. They can help you determine what your tax liability is, if any. Between the two different provisions that I just mentioned, I’d say that 95% of our short sale clients have no tax ramifications what so ever.

One of the things that I really want to get across to you is that when someone makes a blanket statement about owing taxes when your complete a short sale, it’s a really good indication that the person doesn’t really know what they’re talking about. Determining the tax ramifications is actually much more complicated; it’s a question of understanding your financial scenario. If you have more questions about this subject or anything else related to short sales please don’t hesitate to pick up the phone and give us a call.

Behind On Your Payments? You Don’t Have To Choose Foreclosure

July 6, 2015

I run into a lot of people that are in a situation where they know they can’t keep their house anymore; they may already be late on their payments or are underwater. One of the common misunderstandings that people in situations like this have is that they have to choose foreclosure or short sale. If your payments aren’t being made, foreclosure is imminent; if you’d like we can always explain this in more detail to you. There seems to be, at times, that homeowners feel they have to choose one or the other. If your payments are not being made there is no reason we can’t attempt to get a short sale done with your lender. Just because you’re not making payments anymore doesn’t mean your lender won’t approve your short sale; if anything, this is actually a justification of why you need to do a short sale on your home.

What I want to get across to you is if you’re in a place where you’re not making payments and can’t keep the house, you have nothing to lose by having us try to do a short sale with your lender. If we can get the short sale accomplished for you, you avoid having a foreclosure on your credit report and if you’re ready to be done with the house, we can get a short sale completed much faster than your lender can complete a foreclosure on your home.

I know you probably have additional questions about this so I’d like to let you know that there is additional information on my website. However, the easiest way to get the answers you’re looking for is to simply pick up the phone and give us a call. We look forward to talking with you and helping you with your situation.

Read Your Short Sale Approval Letter Thoroughly

June 30, 2015

Today I wanted to cover a subject that almost everyone we talk to has questions about. It is a tough subject to talk about and the questions are often difficult to answer because the answer is really dependent on your particular situation. The question is always, “What happens after a short sale? Am I still going to have a deficiency or owe my lender money once the short sale is completed?” Again, this is dependent on so many different factors. For example, if you have an FHA loan, they release the homeowner from the deficient amount. The odds are that many other lenders and loan types will also release clients from their mortgages however there’s just no telling until the process is completed.

One of the important things for you, the homeowner, is to make sure your agent will actually examine the letter the lender sends and make sure it says they’ll release you from the deficiency. Most of the forms our customers receive do fully release them from the deficiency but every so often we’ll have a lender that won’t initially release the borrower from their debt. It’s at this point we go back to the lender and request that they release the borrower from the debt that is owed.

Really what a short sale is, is a whole new agreement with the lender. Your approval letter is what spells this agreement out. You need to make sure you’re hiring someone that understands this and can handle it should a problem with the lender arise. We have an attorney in the area that we work closely with so if you want your short sale approval letter looked at by someone in the legal field, they can do that for you to ensure that you won’t owe any money to your lender once your short sale is completed.

If you’re considering a short sale and want to know all the ins and outs of the transaction, please don’t hesitate to pick up the phone and give us a call to discuss your specific situation and whether a short sale is the solution to your mortgage problem.

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About Shawn Polston

Shawn has been a Realtor since 2006. Prior to becoming an agent Shawn and his wife were active real estate investors. Shawn takes his education seriously; he’s taken over 200 hours of continuing education classes, to keep up-to-date on current laws and trends. Shawn is a member of the Arizona Association of Realtors Master of Real Estate Society and a Graduate of the Realtor Institute. He is also a HAFA certified Short Sales and Foreclosure Specialist in addition to being a National Association of Realtors Short Sale and Foreclosure Resource.

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