Short Sell by Year-End to Avoid the Tax Liability

The end of the year brings a flood of business and legal activity which is designed to soften the impact of an individual or company’s tax liability due the following year.  This typically involves addressing and pursuing a myriad of opportunities and decisions to make this happen.  This year-end, none of these decisions is greater than the need to close on the short-sale of your property to assure that any waiver of deficiency you obtain does not also leave you with a big tax liability come next April 15th!

With the mortgage meltdown of the last five years, and property values having dropped so significantly, it has become quite routine to negotiate a short sale transaction as a way of getting rid of an “underwater property” (a property currently worth less than the outstanding loan amount owed).  Critical to these negotiated transactions are the lender’s willingness to “waive the deficiency” (i.e., the amount between the sales price and the outstanding balance due), and the borrower’s subsequent tax liability for that waiver.

The waiver of any portion of the loan obligation has always been considered “regular income” by the IRS.  However, in 2007, The Mortgage Debt Relief Act of 2007 changed all that to the extent that it generally served to allow taxpayers to exclude income from the “forgiveness” of debt on their principal residence.  This has been a tremendous, true stimulus to the real estate market during these lean years.  Now, this provision, already renewed once, is about to expire again.  And no one knows whether a renewal of this exemption is in sight.  Hence, the countdown has begun.

If you are a seller of an “underwater property”, it is vital you close by year-end.  Otherwise, closing in 2014 may lead to a future tax liability.  Remember, …. the Reyes Law Group not only can help you aggressively litigate your case, plus negotiate your loan modification, … but we can help you negotiate and close that short-sale transaction on time!  In the end, YOU too deserve a passionate voice to help you defend your property and/or preserve your rights!

Carlos J. Reyes  is the Principal of Reyes Law Group. He has been a member of the Florida Bar since 1988 and practices state-wide.  Carlos has been awarded a rating of “AV Preeminent” which is the highest possible rating in both legal ability and ethical standards by Martindale-Hubbell – a well-recognized legal resource. The RLG Legal Team also include attorneys Stephan LopezMelissa J. UlloaPhillip A. Ortiz and the RLG Legal Support Team to bring you a dedicated, experienced and dynamic legal team to handle your legal needs.

We also assist clients in the areas of: Civil LitigationReal Estate LitigationResidential Purchase & SalesCommercial Acquisitions & SalesResidential Landlord-Tenant LitigationCommercial Landlord-Tenant LitigationShort Sales NegotiationsLoan ModificationsCriminal DefenseCivil Rights ClaimsFamily LawCorporate Work, and Labor & Employment Law.

Call us for a FREE consultation at (954) 369-1993  Se Habla Español.

Visit our firm website and review our credentials.

We are located at 150 S Pine Island Rd #210, Plantation, FL 33324


The Reyes Law Group BLOG is intended to provide information to firm clients, friends and potential clients about various legal related topics. Nothing in this BLOG should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this BLOG without seeking the advice of legal counsel.

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Reyes Law Group

Reyes Law Group represents clients in a multi-disciplinary legal practice involving real estate transactions and litigation with a “footprint” that covers the State of Florida. Over the firm’s first 10 years, Reyes Law Group has closed over $100M in commercial closings, representing buyers and sellers in contract negotiations, due diligence, and the related title review and policy issuance related to closings. In litigation, the firm has commercial litigation experience focused on prosecuting or defending claims such as breach of contracts, partition actions, trade secret violations, and breach of non-competes. However, our firm’s MAIN FOCUS is assisting asset and loan portfolio managers, investors and private lenders with a “ 4-PILLAR APPROACH” to the legal challenges they face with non-performing assets: 1) LOAN WORKOUTS; 2) COMMERCIAL FORECLOSURES (across the State of Florida); 3) COMMERCIAL EVICTIONS; and 4) REO COMMERCIAL CLOSINGS.30+ years’ legal experience means - WE CAN HELP!

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