SAN DIEGO, Feb. 22, 2012 — Joy Bender, a San Diego short sale realtor and a Certified Distressed Property Expert (CDPE), educates thousands of investors regarding their overleveraged underperforming assets.
Indicating the importance of evaluating equity position for non-owner occupied homes, San Diego short sale realtor Joy Bender has launched a campaign to educate investors on the potential solution to an upside-down rental property.
Bender, who currently works as a short sale realtor in San Diego and is affiliated with Trinity Homes and Investments, observes that 29.7% of all California homeowners are in an upside-down equity position and an additional 4.6% at a near negative equity position. Many of these properties are vacation or investment properties.
"As the April 17th tax filing deadline nears, investors need to analyze their equity position in conjunction with potential tax implications," Bender said. "It is important to evaluate your investment property with the same financial perspective as an underperforming stock or mutual fund. Many owners of rental property are not only in a negative equity position, but they also are ending up with a monthly shortfall from the rental income. Oftentimes when investors finally realize throwing good money after bad is irrational they contemplate a short sale or foreclosure."
The Mortgage Forgiveness Debt Relief Act does not protect investors from tax liability. In the event of a short sale or foreclosure, the IRS considers the bank's loss as income for the homeowner. Real estate commissions, delinquent taxes and association dues, and closing costs are also included in the loss. The bank issues a 1099-c for the difference. A short sale is the best choice because in most cases it will yield 12-25% more money to the bank than a foreclosure. Therefore, the 1099-c will be 12-25% lower. Bender said, "The longer you wait to take action the further your property may depreciate, subsequently increasing your 1099-c income."
After an investment property short sale it is important to significantly reduce any income tax liability. In some cases tax provisions can be combined that permit the use of the Business Property Exclusion. The Business Property Exclusion allows a real business loss to reduce real income and real income tax owed. "Investors also need to consider potential capital gains. It is quite common that the mortgage exceeds the value of the property; however, the original acquisition cost was much lower," Bender advises. "It's always vital to consult with an attorney and tax advisor regarding potential recourse and tax liability."
About Joy Bender:
Joy Bender is a San Diego short sale realtor and a Certified Distressed Property Expert (CDPE). Her real estate articles have been published nationwide in over 358 newspapers, online news services, magazines, television stations and radio stations. She currently provides real estate solutions for distressed homeowners facing foreclosure or homeowners opting for a strategic short sale. For a free property effective cost analysis after deductions, visit http://www.luxurysocalshortsale.com or call her direct line at (760) 212-2717.
To read Joy Bender's client testimonials, visit http://maps.google.com/maps/place?hl=en&georestrict=input_srcid:887e23950ec59d78&dtab=2.
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