Good News for Short-Sales! Part of the fiscal cliff deal approved last week included an extension of the forgiveness for taxes owed on relieved mortgage debt related to short-sales. This extension will last until 12/31/2013. In the past, when a homeowner completed a short-sale, the forgiven debt would have been counted as income and therefore taxed.
How does this help first time home buyers though? Extending this tax forgiveness will probably mean more underwater homeowners will make the decision to sell. If the Federal Government wouldn’t have extended this break, it would have potentially been one more thing forcing underwater homeowners to stay in a home they couldn’t afford.
But how does that help me, if I’m buying my first home? The Greater Seattle area has had quite a lack of inventory for some time now. Home prices in Seattle are continuing to rise partially because there are a lot of first time home buyers looking to buy, but not many homes on the market. This causes multiple offer situations and bidding wars, which increases prices for first time home buyers.
So should first time home buyers buy short-sales? Short-sales can be great deals in some cases, but there are some risks first time home buyers need to be aware of. If you are considering buying a short-sale, you should first become educated on how they function.
Don’t buy a home without getting educated first! If you’re thinking about buying a short-sale, or are looking for general information about buying your first home, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.