You may have seen it in your mailbox over the past six months: that notice from your friendly neighborhood Realtor urging you to short-sale your home now before it’s too late! Too late for what?
Grumpy real estate agents battling a market with obscenely low inventory are doing anything these days to get your attention. And the latest push is to talk up getting your home listed and sold before Congress’ Mortgage Debt Relief Act (MDRA) expires at the end of 2012 and all hell breaks loose on your future tax bill.
With the onslaught of foreclosures starting in 2007, congressmen learned pretty quickly that getting banks to forgive debt through a short sale was only the first battle. Once they did, homeowners were saddled with a tax bill on the forgiven debt. Ouch! Paying taxes on $100,000 or $200,000 in lost home value? Thankfully, the MDRA has spared thousands of troubled homeowners this pain through the years.
Despite the panicky marketing, an extension of the act is probably a political layup, says Nasser Daneshvary, head of UNLV’s Lied Institute for Real Estate Studies, in one of his last interviews before he died on Aug. 18. He doesn’t like these marketing practices from area real estate agents and encourages homeowners to send the misleading information to the recycling bin. Daneshvary points out that President Obama’s 2013 budget already has an MDRA extension written in through 2014 and possibly beyond. And it’s hard to believe a Romney administration would reject an extension, he added.
Even Greater Las Vegas Association of Realtors President Kolleen Kelley believes an extension is immanent.
“We haven’t heard of anything that would tell us otherwise,” she says.