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The summer buying season hit and it has been another great summer as Jacksonville home prices are so affordable and rates are at historic lows.  It's been the perfect storm for those who can purchase and those who can sell.

In Jacksonville we are still seeing about half the market as distressed sales, which is made up of short sales and bank owned sales.  This is a trend I don't see letting up anytime soon. 

Despite all the positive real estate news, the fact remains the values of properties dropped in Jacksonville by some 30-40%+.  It will take a long time before many of those home owners are back to even.  Add the high unemployment above 9% and I believe we will continue to see distressed…

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IRS Mortgage Debt Forgiveness 2012 for Short Sales

One big problem in short selling or foreclosures is the tax burden.

If your home is foreclosed, deed in lieu, or short sold, the debt forgiven is taxable income.  For example:

You owe = $200,000

You short sale the house and the bank agrees to take fair market value = $120,000.

$80,000 was the amount forgiven, which is now classified as taxable income to you. 

You currently make $40,000 annual income that you pay taxes on. 

Now add the $80,000 for the year, and you just made $120,000 for the year, which you owe taxes on at the higher tax rate. 

BUT - Since 2007, we have had the Mortgage Forgiveness Debt Relief Act of 2007 - takes you to IRS.gov for quick info.  Under this Act, if…

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