“Phantom Income” is Less Distressing/S 1394

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Great news for homeowners who face short sales on their primary residence.  The House of Representatives overwhelmingly approved legislation that would end the controversial practice of treating the balance of a home sold at a loss by a lender.  In other words, under current tax law; the homeowner has  the additional burden of having to pay income tax on the difference between what their foreclosed home sold for and what they paid for the house.

This practice has forced many families into Bankruptcy as part of losing their home.  Kind of a double whammy.  This will also help Banks and mortgage brokers get these homes on the market and sold.  This should speed up the process.  It also allow families to get on with their life and resolves some of the additional financial burden.  it’s all good.