Solving the Knoxville Foreclosure Crisis
One Homeowner at a Time

Rick Smenner

RE/MAX Preferred Properties
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Mortgage Forgiveness Act: Will It Be Extended for Knoxville Short Sales?

knoxvilleshortsaletaxesKnoxville, Tennessee -- The Mortgage Forgiveness Debt Relief Act and Debt Cancellation was passed in 2007 to help distressed homeowners in Knoxville, and across the nation, from paying income tax on their forgiven debt. This meant that homeowners that went into foreclosure or who did a short sale on their Knoxville home, would not have to pay income tax on their forgiven debt. Up until 2007, if your Knoxville home was sold in a short sale or went into foreclosure, you were still responsible for paying taxes on the forgiven debt.  The Mortgage Forgiveness Debt Relief Act expires at the end of 2012. President Obama has included it on his FY2013 Budget Proposal. The proposal calls for an extension the the policy through January 1, 2015, after which the government would see if an extension is still appropriate. Under the Mortgage Forgiveness Act, any borrower who sold their Knoxville home in a short sale, modified their loan, or went into foreclosure, is not required to pay taxes on that income, up to $2 million for those filing their taxes jointly and $1 million for those filing his/her taxes as individually. Also, the act only applies to homes that are considered to be a primary residence. If the home is not a person's primary residence, a borrower may still qualify to exclude the tax as claimed income. In order to due so, a borrower would have to show they are insolvent, which is when your total liabilities exceed your total assets.  For more information about what the Mortgage Forgiveness Debt Relief Act covers, visit the IRS website. Do you have questions about what a short sale or foreclosure could mean for you? If you are having trouble making your mortgage payments you, do have options other than foreclosure that won’t cost you a dime. Please do not hesitate to contact me for a free consultation to talk about your situation and explore your options. Call me at 865-696-9002 or email me [email protected]

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