Monday, December 10, 2012

Tax Break To Expire & Short Sales Of Homes Surge

According to BloombergHomeowners and banks are accelerating sales of properties for less than the amount owed as a United States law that gives them a tax break expires at the end of the year.
In a recent report by 
mortgage data seller Renwood RealtyTrac LLC., short sales accounted for 41.5 percent of home purchases in the quarter. The transactions also increased by 35 percent in the third quarter from a year earlier.
“If you’re struggling to pay your mortgage, it’s not likely you can afford an extra $25,000 or $35,000 tax bill to avoid foreclosure,” said Edward Mills, a financial policy analyst at FBR Capital Markets in Arlington, Virginia. “Mortgage forgiveness has become part of fiscal cliff politics.”

Various individuals, such as the 
vice president at RealtyTrac, Daren Blomquist, state that short sales are actually better for the real estate market than the sales of bank-owned properties.
According to the report, short sales accounted for 22 percent of all U.S. sales, and were the highest in Rhode Island, at 58 percent; Connecticut, at 47 percent; and Massachusetts, at 44 percent.
Although many point of the positives of short sales, many advocates claim that the law’s expiration could jeopardize progress made regarding the six-year housing decline.