Solving the Knoxville Foreclosure Crisis
One Homeowner at a Time

Rick Smenner

RE/MAX Preferred Properties
[email protected]

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Knoxville Short Sales – Update On The Mortgage Debt Relief Act

taxFor Knoxville homeowners who faced foreclosure or did a Knoxville short sale, the Mortgage Debt Relief Act was a saving grace.  It saved homeowners from having to pay income tax on forgiven debt. Unfortunately, the Mortgage Debt Relief Act expired on December 31st, 2013. So, what does this mean for Knoxville homeowners that have gone through foreclosure this year or completed a Knoxville short sale? Without the extension of the Mortgage Debt Relief Act prior to the end of the year, any homeowners who went through foreclosure or did a short sale may have to face a hefty tax bill at the end of the year. For example, if you owed $150,000 on your Knoxville home, but sold it for $100,000 in a short sale, the forgiven debt would be $50,000. This would mean you would receive 1099-C from your lender and may have to pay income taxes on the remaining $50,000. It still remains to be seen whether or not Congress will finally agree on an extension of the Mortgage Debt Relief Act. If it is voted on by the end of the year, any homeowner that went through foreclosure or did a Knoxville short sale will not be required to pay income on the forgiven debt. To qualify, the home must be the primary residence, and can only be up to $1 million for those filing as an individual and $2 million for those filing jointly. While parties on both sides of the aisle have agreed the extension of the Act is necessary, they have not managed to come to an agreement yet. Even if the Act isn't extended, there some hope for homeowners who have gone through foreclosure or Knoxville short sales this year. Knoxville homeowners are able to prove they are insolvent, that is their overall debts exceed their assets, which would not require them to pay taxes on the forgiven debt. We can only hope that the Act will be extended before the end of the year, since there are still many Knoxville homeowners who are underwater on their Knoxville home. Are you facing foreclosure on your Knoxville home? If there is any way my team and I can help, please do not hesitate to give us a call at 865-696-9002 or via email at [email protected]. We've helped countless homeowners avoid foreclosure on their Knoxville home and all of our services are done at absolutely no cost to you.  

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