Short Sales: I’m Certified By the CDPE to Help You Through The Process

Short sales are affecting all price ranges these days and not just the first time home buyer or lower end market.  Luxury homes are now feeling the pinch of the economy as money is tight for everybody.  According to a recent survey, one out of every seven mortgages is in trouble.  So, if you are doing ok, look around at the homes on your street and you will find several of your neighbors facing difficulty in paying their mortgage.

With that in mind, the CDPE, or certified distressed property experts as I’ll call it, is out there to help homeowners in all price ranges complete a short sale instead of having to face foreclosure.  I am certified in this process, which means I can handle regular listings and sales as well as short sales from both sides (buyer or seller).  This means that I have training that a normal agent doesn’t to help increase the chances of getting a short sale through.  The standard non trained agent succeeds in a short sale about 15% of the time, while a CDPE certified agent has a 85% success rate.  A big difference as short sales are full of emotion and having to deal with the failure of a short sale can be  another traumatic event in a sellers life.

So, even if you have a luxury home in Menlo Park or Atherton or Palo Alto, there is a chance you will need my services to help you with a short sale.  If you need more information about short sales and to find out if it’s right for you, give me a call or send me an email.

Short Sales Could Mean Big Taxes!

Just When You Think You Are Back On Your Feet, The IRS Keeps You In The Prone Position.

If you are considering a real estate short sale of your home, you should be aware that you may receive a form 1099-C for the amount of the lender’s losses. This is considered loan forgiveness in the eyes of the IRS.

If you have other assets such as saving and you are not insolvent, you may end up being responsible to pay ordinary taxes on the amount of the 1099-C.

If you settle a debt with a creditor for less than the full amount owed, you may be required to report this forgiven debt as regular income, with certain important exceptions. The forgiven debts include money owed after foreclosure or property repossession or credit accounts that you don’t pay. There are exceptions noted below.

If a lender forgives or writes off $600 or more of a debt’s principal (the amount not including interest or fees), they must send you and the IRS a Form 1099-C at the end of the year. When you file your tax return for the tax year in which your debt was written off, the IRS will require that you report the amount on the form as income.

While you may not have received this form from the creditor, the creditor may have submitted one to the IRS anyway. If you don’t list the income on your tax return and the IRS has the information of the transaction on file, you could get a tax bill or, worse, an audit notice. This could end up costing you more than just the original tax bill.

There are several exceptions stated in the Internal Revenue Code. For example, you do not have to report the income on your tax return if the write off of the debt is intended as a gift, you discharge the debt in bankruptcy, or you were insolvent before the creditor agreed to settle or write off the debt. You should consult a qualified tax and legal counsel to see if these circumstances apply.

So, just when you thought you found a way to solve your problems, the IRS makes sure they are there to prevent it from happening.