A new law in North Carolina is making short sales a more expensive proposition, as legislatures have approved an alteration to the tax code that would impose a tax on short sale transactions. So in today’s article from The Short Sale Gal Kristine Zelazo, we’ll explore what this new short sale law means and how it will impact homeowners not only in North Carolina but potentially in other parts of the nation as well.
ABOUT THE NORTH CAROLINA TAXATION ON SHORT SALE LAW
The vote in the North Carolina House of Representatives came down last week with a 67-to-42 vote in favor of the bill to tax any and all income from a short sale. “Income” is considered the difference between the amount owed on the property and the actual sale price. So if a homeowner owed $300,000 on their home, but sells it for $225,000 in a short sale, they will now need to pay taxes on the $75,000 differential.
Also known as NC Senate Bill 726 represents a problematic precedent that could have a dramatic impact if similar bills come up for consideration in other regions of the country.
Many North Carolina democrats opposed the bill. Rep. Luke Leubke spoke out against the short sale income taxation bill, saying, “We are taxing many, many people in the middle class who are caught up in this mortgage debt issue. There surely ought to be some opportunity for people who are in difficult financial straits to not be taxed on that amount.”
In many other states, the “income” on short sales is forgiven as a result of the federal 2007 Mortgage Forgiveness and Debt Relief Act. This particular short sale law was put into place when the real estate market started tanking. It was designed to make short sales a financially viable solution, thereby promoting this course of action for homeowners who are in over their head financially.
“The law helped spur short sales….[they were viewed as] a great solution to a problem of homeowners who have gotten in over their heads. But if they get this huge tax bill on top of that that’s really not helping them out at the end of the day,” remarked Daren Blomquist of the original short sale law established in 2007. Blomquist is the Senior Vice President at RealtyTrac. RealtyTrac is a firm that tracks foreclosures and real estate sales nationwide.
GETTING INVOLVED WITH REAL ESTATE INVESTING WITH KRISTINE ZELAZO, THE SHORT SALE GAL
If you’re in search of an investment property, wish to get involved in real estate investments such as buying short sales, but are unsure of where to begin, turn to Kristine Zelazo, the Short Sale Gal! In addition to helping buyers and sellers with short sale transactions in South Florida and beyond, The Short Sale Gal Kristine Zelazo also works with a small number of real estate investors who are seeking to get involved in short sale investing, rehabbing and fix and flipping properties.
Kristine Zelazo has years of experience in the real estate investing field, so she’s well-positioned to provide guidance to new investors who are seeking a mentor and business partner.
In addition, The Short Sale Gal also serves as a short sale expert and licensed Realtor, assisting individuals who are seeking to sell their distressed properties in a short sale in South Florida and beyond.
If you’re seeking to sell your home in a short sale or wish to sell your home to an investor, simply complete the home pre-sale form to provide Kristine with additional information on the property in question. Then, call 786.570.0360.