If you like saving money, time is running out on a very important tax credit, so you should get in touch with a Denver short sale specialist as soon as possible. The Mortgage Forgiveness Debt Relief Act of 2007 was implemented to save homeowners money by making them exempt from paying taxes on forgiven debt. If you are at all thinking about doing a short sale, you will more than likely qualify for this tax exemption, so you need to act quickly to begin the process. A short sale usually takes approximately six months to do, from initially listing the property to negotiating with the lender to closing on the home. With June fast approaching, time is really running out considering the short sale process can sometimes take longer than a normal real estate transaction.

Typically when you short sale your home, or even if you have debt forgiven in a foreclosure, you receive a 1099 from your lender showing the forgiven amount. The IRS views this amount as taxable income and, if it weren’t for the Mortgage Forgiveness Debt Relief Act, would tax you on it. Depending on the amount that has been forgiven, it could add up to thousands of dollars out of your pocket. Thanks to the MFDRA, however, you can save money by not paying taxes on the forgiven amount if your short sale is closed by the end of 2012. There is no talk about extending the act and most short sale specialists don’t believe it will be extended.

While most homeowners do qualify for the act, here are some situations that make property owners ineligible for the MFDRA. If the property that is sold is an investment property, second home or business property, you do not qualify for this act. Also, there is a cap of $2 million of forgiven debt that can be considered exempt from paying taxes. For further stipulations on this act, check out the IRS website or contact a Denver short sale specialist today. Don’t waste your time and money by not taking advantage of the Mortgage Forgiveness Debt Relief Act. Contact a short sale specialist and start the short sale process today!