Many facing short sales in the West Atlanta Real Estate market and the rest of the country will have to face the expiration of the Mortgage Forgiveness deadline on December 31, 2012.

NEW YORK (CNNMoney) -- The clock is ticking on a tax break that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for forgiven amounts in short sales and principal reductions.

"People trying to do short sales are freaked out about it," said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. "They're telling me they'll do whatever it takes to close by the end of the year.

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Feel free to contact us here at West Atlanta Real Estate  for a no cost consultation about your situation.  We are experienced in

  • Short Sale Process
  • Dealing with first and second lien holders
  • Short sale documentation
  • Finalizing the short sale and closing the sale

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