Once upon a time, when a homeowner did a short sale, the IRS counted the difference between what the bank took and what the homeowner owed as income. Not much incentive there.

In 2007, the federal government enacted the MDRA that allows qualified taxpayers to exclude that “income”.

The law will end December 31st.

You must close the short sale by then.

Other qualifications include:

Good for up to $2,000,000 in forgiven debt

Only works for principal homes

The tax rule can be applied to debt used to refinance your home, provided the principal balance of the old mortgage, immediately before the refinancing, would have qualified.

See “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation” for additional information.  Use this link: http://tinyurl.com/5pe43f .

If you’ve been considering a short sale, it’s time to get off the stick. Short sales are notorious for taking a long time, like six months or more.

If you are in are upside down and are having problems making your payments, it’s time to do something. It’s going to take a long time before and upside down property becomes positive.

MARKET STATISTICS

Sales of single-family, re-sale homes were up 2.2% year-over-year in January.

Condo sales gained 20% year-over-year.

The median price for homes was flat year-over-year.

The median price for condos dropped 30.2% year-over-year.

Home inventory continues to shrink and is now at its lowest level since January 2010: 490 homes actively listed. Please note, only active listings are included in this figure. Numbers from the local associations include properties that are also in a pending status, meaning they have an accepted offer, but haven’t been taken off the market.

Condo inventory was down 11.5% year-over-year.

Pending sales for homes rose 10.4% from last January.

Condo pending sales were up 43.8%.

Please remember, while statistics are nice, they will not determine the price you pay or get for a property. That will come down to you and the buyer or seller.