In short, I don’t know. According to a study released by
CNN.COM in early March, the number of homeowners who owe more on their
mortgage(s) than their properties are worth – more commonly referred to as
being “underwater” - increased by 3.7% during the last three (3) months of
2011. My contention is that this trend will continue, and the Act provides
relief for, among others, homeowners who must resort to short-sales in order to
get out from under this mess. Consequently, these homeowners who sell their
properties for less than what they owe on their mortgage(s) are
saddled with substantial tax ramifications unless they fall under one of the exemptions
of the Act. Should the homeowner not qualify under the principal residence or
insolvency exemptions (the two exemptions germane to the sale of real property), he or she will have to report the difference in price
between the sale of the property and the amount owed as income.
Please see the following link to the IRS for more
information concerning the above and let’s hope the Act is extended past 2012;
not only for those who may benefit from it, but also for the benefit of the
overall economy.
