Birmingham, Michigan
2051 Villa Road, Suite 105
Birmingham, MI 48009
Phone: 248-203-9100
Toll-Free: 866-236-4TAX
Email: info@freemantaxlaw.com
Helping Property Owners Understand the Tax Consequences of Foreclosure
America's housing crisis shows no signs of abating. Over the past few years, countless individuals have been foreclosed upon. For many people, foreclosure brings on another unforeseen issue: taxes. In certain cases, foreclosure or short sale can be a considerable tax event. If you are facing the loss of a property and want to minimize the potential tax consequences, it is important to consult with a knowledgeable tax attorney. The Law Offices of Jeffrey S. Freeman provides knowledgeable counsel to minimize the potential tax issues associated with foreclosure.
Any foreclosure or short sale involves the cancellation of debt. According to the IRS, the cancellation of debt is often a taxable event and must be reported as income. Cancellation of debt can result in hundreds of thousands of dollars in taxable income. Many foreclosures, however, are exempt from this requirement. In 2007, Congress passed the Mortgage Forgiveness Debt Relief Act. This exemption applies in the following situations:
- This exemption applies only to debt incurred to purchase, build or improve your principal residence.
- Any debt must be secured by the home.
- Up to $1 million ($2 million for joint filers) in mortgage debt is exempt.
This exemption is scheduled to expire at the end of 2012. As the exemption does not apply to investment properties, second homes or vacation homes, the foreclosure of these properties can result in a significant tax burden. Our law firm has a comprehensive tax practice and is prepared to advise you of the various tax advantages and disadvantages of foreclosure or short sale.
Contact the Tax Lawyers at the Law Offices of Jeffrey S. Freeman Today
If you wish to discuss the tax implications of the disposal of your property, call us today. Although our law firm was founded in Michigan, we maintain offices across the United States for your convenience. Contact us immediately to schedule an initial consultation.
