I wrote a blog last year talking about how short sales would slow down because Congress did not extend the Mortgage Forgiveness Debt Relief Act (MFDRA). Based on the real estate statistics for Tampa in January the number of short sales have decreased. I believe some of it has the do with the law not being extended and home owners have a little equity in their homes because of the price increases of 2013. Either way, it's good news that the short sale market is depleting.
Expired short sale tax relief may impact home sales
“According to Fitch Ratings, the recently expired tax relief provided by the Mortgage Forgiveness Debt Relief Act (MFDRA) of 2007 may lead to modestly negative pressure on liquidation timelines as potential short sellers hold off listing their home. The longer it takes for Congress to renew the tax forgiveness – assuming it does – the more home sales will be impacted.
The tax relief expired Jan. 1, 2014, creating larger tax burdens for underwater borrowers who receive some form of mortgage debt forgiveness. Without tax forgiveness, the IRS considers any capital forgiven by a lender in a short sale or foreclosure to be income to the homeowner, and it taxes it accordingly. The MFDRA provided tax relief by allowing certain borrowers to exclude such income on their tax returns. The act applied only to debt associated with a primary residence, and no more than $2 million of debt could be excluded per year.”
If you have any questions about the real estate market in Tampa Bay, please give me a call. I pull market statistics every month and have a great pause on the real estate market in Florida. I have been doing short sales since 1999 and am an expert in that field. Click here to visit my short sale webpage.