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

In January, sales of single-family, re-sale homes dropped 36.5% from December, and were off 18.5% year-over-year.

Condo sales fell 20.8% from December, and were down 17.4% year-over-year.

The median price for homes was up 5% from December, and up 10.8% year-over-year.

The median price for condos gained 6.7% compared to December, and was up 113.3% year-over-year.

Inventory of both homes and condos continues to be low. Home inventory was down 26.2% compared to last January.

Condo inventory was down 15.3% year-over-year.

Pending sales for homes was off 5.8% year-over-year, while condo pending sales were off 11.9%.

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.