The 2007-2012 Mortgage Debt Relief Act

Bills .com is a website that offer simple money solutions. Below may be helpful for anyone thinking about a short sale. I advise my clients always speak to an attorney and an accountant who specializes in distressed sales before listing their home as a short sale. The 2007 Debt Relief Act will expire the end of 2012. Stay tuned for more blog updates regarding expiration.

Information on 1099 Income From Short Sale

Will IRS provide me any payment plan for the taxes that I owe after the short sale deficiency balance is reported via 1099?

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I am going through the short sale process with lender agreeing for short sale. Lender says that the deficiency balance on mortgage and home equity loan will be reported to IRS via 1099 form. At this time I am looking at $80,000 deficiency balance. If I agree to this and go for short sale, Can the bank still come after me for the balance after reporting to IRS on 1099. Since I am going through this process as I cannot afford to make payments, Will IRS provide me any payment plan for the taxes that I owe after the deficiency balance is reported via 1099? Are there any other things that I should talk to the banker before signing the purchase agreement offered by the buyer in this short sale proceeding? I really appreciate your answers to these two questions as soon as possible. I have to sign these documents in 2 days.

Bill's Answer:Bills.com Resident Expert

You might avoid paying taxes on the imputed income indicated in the 1099-C as per the "Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648)." Mortgage Debt Relief Act will save some homeowners facing short-sales or foreclosures from paying federal taxes on the “forgiven” debt. There are very specific requirements:

• The mortgage is for the homeowner's principal residence. The relief does not apply to any debt forgiveness for any vacation or investment home.
• Forgiveness is only for the “acquisition indebtedness” of the principal residence. Acquisition Indebtedness is defined as the debt used to acquire, construct or rehabilitate the home.
• No relief is available for cash-out mortgages whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, a home equity line of credit or a similar arrangement. Exception: If the cash-out was specifically used to improve the home and the homeowner has adequate records to prove it.

This bill relieves the specific homeowner of their federal tax liability but does NOT relieve the homeowner of their state income tax liability.

If you have refinanced your mortgage, have a second, a third or if this is an investment property -- you likely do not fall under the protection of this act at all. I strongly suggest that you enlist the counsel of an experienced attorney and for tax implications, get expert advice from an income tax professional (CPA). Ask the tax professional if you are eligible to use the IRS Form 982, so you can refrain from declaring as income any amount listed on a 1099-C you receive for cancellation of debt. You can read more on the FAQ section of the IRS document Home Foreclosure and Debt Cancellation.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Home Issues- by John VanderMde

Home Issues, post 3, Siding.

Siding is much more important on the OBX than most other areas... why?  Because it doesn't rain straight down here very often, so it pays to think of the siding as performing the same function as a roof - it MUST be designed and installed in such a way to channel water away from the vulnerable openings and structural elements of the home.

I'm going to list the different types of siding, and their relative advantages and problems, but first, let's talk about what's under the siding - the "vapor barrier" or "house wrap".  Siding can and will fail, so it's VERY important to have an waterproof material underneath, and there is only one proven material for this purpose on the OBX - saturated felt paper, more commonly known as "tar paper".  Some builders try to use Tyvek or Typar plastic house wraps - and this tends to be a very bad idea.  Both of those materials will allow moisture to penetrate through to the sheathing, and I've seen homes that needed all the framing and sheathing on an entire side replaced due to rot.

Tar paper is MUCH more water resistant, and has stood the test of time on countless oceanfront homes taking the full beating from mother natures storms.  It seems to allow the sheathing to dry out better too when water does make it in through a crack or knot hole somewhere when compared to plastic house wraps.

Ok, on to some common siding materials, and the good and bad points of each one:

Vinyl Siding - It's quick and easy to install, and doesn't need paint.  However, it's also the first to come off in a windstorm, and it's color will fade over time with sun exposure.  The fake shingle is generally the best type, as it's heavier and less prone to tearing off in high winds.  Vinyl tends to "hang" on the house rather than be attached securely to it, as the nails must not be nailed tight to the siding to allow for expansion during hot weather.

Textured Plywood Siding (T-111, etc) - Cheap and easy to install, you'll find this on many older homes.  It must be kept painted though, as it will break down over time with sun exposure, to the point it will erode off the walls.

Wood Lap Siding - Commonly found on older homes, it generally performs well if kept painted and caulked.  However, the quality of the wood has dropped while the price has increased, so you will rarely find it on newer homes.  Keep an eye on knots, cracks, and splits that might let water penetrate. 

Cedar Shake Siding - My personal favorite, and a traditional choice on the OBX.  It can be painted, but it generally works well without paint if it's the red cedar variety.  Some oils can prolong the shingle life, especially where exposed to strong sun.  It's the most waterproof of the wood sidings, as there is a triple layer of wood at each point - the shingles are 18" long, but only 6" is exposed, so you have a bit of redundancy should one shingle crack or split, plus the nails in each shingle are protected from the elements so they don't rust.

HardiPlank Siding - This is a material made from concrete and wood fibers, and is generally found as Lap Siding, though it can be used in sheet or shingle form too.  It must be painted, but the paint will last much, much longer than paint will on wood.  Care must be taken to use stainless steel nails or rust streaks will mar the home eventually - "Blind Nailing" will help with this, but the end of each board will still require a face nail or two.   HardiPlank has the potential to be the longest lasting and lowest maintenance of any of the siding types generally used - it's only been in widespread use for 15 years or so, but with no failures I know of, and many homes still have the original paint.

From John VanderMyde- Home Issues, post 2

Home Issues, post 2

In the last post I covered some typical issues found on the ground level, and now I'm going to discuss from the ground to the first floor.

Pilings & Plumbing:

Many homes here are built on pilings, which is an excellent foundation system for sand.  Instead of "pressure" bearing, pilings are "friction" bearing, which means they are much less susceptible to shifting or cracking over time when compared to a masonry foundation.

Look for pilings to be 8"x8" rather than the 6"x6" size that was used in the 70's.  Look where the pilings meet the ground for any sign of rot.  Look for pilings to be braced with large "X"s of 2x10s rather than smaller "Y" supports under the beam.  

The one disadvantage of pilings is that the house will shake more than on a masonry foundation, especially if there are no rooms on the ground level.  Enclosed garages and storage areas can really help the rigidity of the house by creating "shear walls" of plywood between pilings.

Next, look to see if any plumbing is exposed.  If there are any supply side pipes exposed to the wind, you can bet they will freeze during a winter cold snap.  Copper pipes will burst or split, and so will polybutylene (gray pipes).  PEX (white or red) will handle freezing weather better, but if the sun shines on the pipes, make sure it's the red PEX as that type is UV resistant.  

The grey Polybutylene pipes have other problems which have been well publicized, but here's a synopsis: If there are plastic elbows with aluminum crimps - plan on replacing all the plumbing.  It WILL leak.  If there are copper elbows and copper crimps, it should be ok in conditioned spaces, but will still have a high incidence of failure when exposed to temperature extremes outside.  PEX is a far superior material, and it usually only costs around $1000 per bathroom to replace, plus any drywall repair.

More to come soon!

CALLING INVESTORS!!! 7 Masters and 71/2 Bath home-$739k

Video Blog 1 (outer banks real estate)

http://youtu.be/pawmr60Wb8w

See links to all 3 new listings below-

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VanderMyde Real Estate has some big changes for our clients! We know you'll be pleased.

I've teamed up with a past co-worker from Kitty Hawk Land Company/The Currituck Club, investment partner with a "rental machine" in Salvo, and now a partner in real estate at RE/MAX Ocean Realty. Stephanie Massoth is everything I'm not,and our clients are going to have the best of both worlds. Satisfaction Guaranteed, your success is our livelihood! 


From Broker/Owner REMAX Ocean Realty- David Perrot

I am excited to announce that Stephanie Massoth will be partnering up with Heather VanderMyde.  Heather and Stephanie worked together from 1995 – 2001 at Kitty Hawk Land Company.  From 2001 – 2010, the Massoths and the VanderMydes were also successful business partners owning a vacation rental property in Salvo. 

About Stephanie…

Stephanie Muzikar Massoth was born and raised is eastern North Carolina and while attending East Carolina University moved to the Outer Banks during the summers.   Stephanie brings over 25 years of experience in the Real Estate Industry. 

Recently, Stephanie worked for Seaside Vacations as the Businesses Development Manager and with Coldwell Banker as an Associate Broker.

Stephanie worked with Kitty Hawk Land Company for 14 years wearing many hats including Associate Broker, Executive to the President Mickey Hayes, Office Management, Sales Assistant and Closing Coordinator processing almost 1500 contracts to closing.  Stephanie has also been involved with buying and selling personal properties since the age of 25. 

Stephanie and Chris Massoth have been married over 11 years.  They reside in Southern Shores with their black lab, Stella Rose.  Stephanie helps Chris with the family business, Chris Massoth Painting Company.  Spare time is enjoyed with family and friends and an occasional Surf Trip in the winter.

Just sold Oceanfront Townhome in Pelican Watch, in Southern Shores