Our nation is currently experiencing a lot of ups and downs in housing market. Properties that used to be worth a lot of money are now worth just a fraction of that. Because of this, many property owners are in a tough situation where they owe a lot more than their mortgage is worth. Also, selling the property would leave them well short of the needed money to pay off the mortgage. You need to understand the implications of short selling your home.
When you add in the fact that many of these upside down homes in Tempe, AZ are in markets that are already distressed and many of the homes were purchased with an adjustable rate mortgage, things become increasingly difficult. Now, mortgages are seeing interest rate hikes and that tacks on thousands of dollars in monthly mortgage payments.
When you combine the two effects, dropping home values in Tempe, Arizona and increasing mortgage payments you are already in trouble. However, couple those problems with the loss of a job, a major contributor to our country’s financial situation, and you have the makings of a disaster. This current situation also contributes to the short selling phenomenon that a growing number of people are starting to enjoy. With the advent of short selling, home owners are able to avoid foreclosure and come out of a terrible situation in better position than otherwise thought possible.
In most cases, short selling will be a much better solution in the long term than letting your home go into foreclosure. Most people who need to use short selling are already unable to afford their mortgage even if they choose to refinance. You must recall that most of these people were assuming that if they needed to sell their home, they would make a profit on it because real estate always increases in value.
The process of short selling can remove a huge burden from the back’s of many home owners. In the past, short selling meant that you would face a large tax on the sale. Now, depending on your state laws, you may not be hit with the taxes that previously came from short selling.
In many states, some of which tax short selling real estate at nine percent or higher, a seller will need to make a significant tax payment. However, with short selling, remember, you are not in a position to keep your home. So, even with the tax implications, short selling is often times the best scenario.
While the federal laws regarding short selling are fairly clear, it is in your best interest to check the short selling tax laws that are applied at the state level. Being informed as to the tax implications you may face in a short selling situation is important. When you don’t know what you don’t know, you should try to find out what you don’t know.
Do you have questions? Read the Short sale FAQs.
Are you a Realtor? Then get free short sale training by Kevin and Fred at Free Realtor Training on ShortSalePower.com
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