Things Homeowners Need to Know About Taxes and Avoiding Foreclosure
Individuals and families in fear of losing their homes finally found relief through the government’s modification program. With some of the principal decreased or the entire second mortgage removed from the equation, making the monthly house payment became a little easier. For some, it was a welcome change from the months of struggling to pay a sizeable mortgage on top of the other living expenses. Unfortunately, for some homeowners just getting used to the idea of keeping their homes, it seems that the other shoe is about to drop.
The Mortgage Debt Forgiveness Relief Act
According to New York Daily News, if The Mortgage Forgiveness Debt Relief Act is not renewed, homeowners will be required to pay tax on the amount of money they saved.
Maintaining the house and decreasing the house payment is great but what happens when the tax time comes around and people notice they have a noticeable increase in taxes due? Come April, homeowners may just feel like their debt was just transferred over to the government.
Already Cutting the Budget
Trying to manage finances, decrease a house payment and get out of debt is a big task for anyone. Aside from the sacrifice it often requires, the only way to make it work is to cut expenses. For many families, this means tightening the belt just a little bit more. Despite all of the planning that some homeowners have done to ensure a better financial state, many will experience a tax bill as yet another setback. Programs created to help homeowners are starting to see the effects of the potential tax increase that could come in 2014. Depending on a person’s income and tax bracket, the amount of taxes due could be considerable and just enough to put them back under when it comes to debt.
Getting Out of Debt
Debt relief services are more important than ever for those facing foreclosure or those struggling to manage their minimum payments on their credit cards. Services to help people get out from under debt, including those, will need to take these things into consideration when helping clients come up with a plan to get out of debt. While there are ways to get an extension in order to pay federal taxes, it usually comes with an additional cost. The IRS also has access to more debt enforcement avenues than a private creditor, including the ability to seize and sell property.
For now, homeowners trying to avoid foreclosure and stay in their homes are waiting patiently to see what will become of The Mortgage Forgiveness Debt Relief Act. It could mean the difference between making their usual tax payments in April or taking on even more debt. Either way, for those in any kind of debt, it is important to seek out the assistance of a company that can offer practical solutions and a way to get the monthly payments under control.