Time running out for tax break on short sales - FOX 13 News

Time running out for tax break on short sales

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LAKELAND (FOX 13) -

There is no time to waste for tens of thousands of Florida homeowners who want to short sell their homes. They have to close by the end of the year to take advantage of a tax break, and if they don't, the sale will trigger a massive tax bill.

Back in 2007, Congress enacted the Mortgage Forgiveness Debt Relief Act to help people who are upside down in their homes, and who want to short sell. If the home sells before

December 31, 2012 they will be off the hook.. But people who sell after that will have to pay taxes on the difference between what they owed on the house and what the place actually sold for.

The looming deadline is not setting well with Kristina and Paul Collins. They hope to leave the country in a few months to become missionaries.

If their home in Lakeland doesn't sell by December 31, they could get socked with $20,000 in taxes.

"And we don't have that money," Kristina said.

The Collins' have a buyer for their home, but they are worried that the paperwork may not go through in time. So their realtor, Jen

Lysak of Keller Williams, is doing everything she can to pressure the bank to keep it moving.

"Calling, e-mailing, faxing. It doesn't matter. We do all of that," Lysak said.

In many cases, sellers would end up with tens of thousands of dollars of extra taxable "income."

At this point, only Congress can fix the problem by extending the deadline, and it's anyone's guess whether that will happen.

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