After the Short sale?

by Nancy Woodward

When real estate is sold, normally there is a profit for the buyer. When the buyer has less equity than the current selling price of the home, it is necessary to do a short sale to avoid foreclosure.

This definitely leads to tax consequences for the seller. They may owe taxes to the government on the amount that was forgiven by the lender. This can be acapital gains.

Many of the homeowners I have spoken to in an effort to help them - don't understand or believe this concept. They tell me ' other investors don't tell me this'.

You should make yourself aware of this situation and how the process actually works. The lender has several ways of handling the deficiency:

1. They can attempt to collect this amount from the seller

2. They can require the seller to sign a promissory note.

3. They can just cancel this amount.

Now we need to see how the IRS handles this process. They consider any amount of mortgage debt ordinary income once it is forgiven. This means income taxes will have to be paid.

More to follow --

New jersey State foreclosures at 16%, South Jersey Falls

by Nancy Woodward

Foreclosures in the south jersey area in the third quarter declined seven percent. Unfortunately forclosures in Cape May County rose thirteen percent during the same period.

These numbers are still below the state average of sixteen percent and the national average of thirty percent.

Realty Trac Inc. calculated the numbers. They are a tracking firm based in Irvine, California with a major presence on the internet.

I have used the site to find foreclosures in the New Jersey area.