Scenario:

You and your family decided to buy a house in the Phoenix West Valley.  You looked at all of the Phoenix Homes for sale and decided on a beautiful $256,000 4/2 in the Phoenix West Valley and in the fall of 2006 , your American Dream began.

However, your dream turned into a nightmare.  You look at your American Dream and your realize that you are now owing over $130,000 more than what you owe for it.

This can become a scary prospect when you are forced to sell your home due to relocation, a lost job or death in the family. That’s why the President George W. Bush and congress passed House Bill 3648 – the Mortgage Forgiveness Debt Relief Act of 2007. More commonly known as Program 3648.

Prior to program 3648, here is what happened. If  you fell behind in your mortgage payments, lost your job or just couldn’t keep up with the bills. You decided to sell your house and get out from under the mortgage. You bought the house for $256,000 but could only sell it for $156,000. The bank would then issue a 1099 to you at the end of the year for $100,000. That meant that you would have to report $100,000 on your tax return, as income, and pay taxes on it. Can you imagine? What a tax bill.

Thankfully, Program 3648 was created as a safeguard for the crumbling housing market.  The Mortgage Debt Forgiveness act means you are no longer liable for taxes on that “profit” when you short sold your house.

Rules:

It has to be your primary residence.  The bill says that you must live in that house for 6 consecutive months but it does not say when those 6 months of residency must occur.  You must also make sure that the mortgage company will not becoming after you for the difference.  For additional protection talk to your CPA.

We at West Valley Pros have seen a very high success rate in Short Selling your Phoenix Home.  If you have any questions please ask.