In this week's episode of the Yesner Law Podcast, I discuss the Mortgage Debt Relief Act ("MDRA"). This law provides that forgiveness of debt income, or phantom income, related to the foreclosure or short sale of a primary residence is non-taxable if the loan deficit that is waived is related to a loan used to buy or make improvements to the house.
When you complete a short sale or lose a house to foreclosure, the bank may choose to waive the deficit - the difference between the amount owed on the loan and the value of the house. The IRS sees that as a benefit (a debt that is due but does not have to be repaid). The bank reports this by issuing IRS Form 1099-C. Many people misunderstand that the MDRA only excludes the income, the MDRA says nothing about the issuance of the Form 1099-C. What I explain to clients is that they need to file the form 1099-C with their return, AND file the proper forms to show the IRS the deficiency is excluded as income. Of course, the mechanics of how to do that fall within income tax guidelines and so we refer to a CPA or Tax Attorney at that point.
The MDRA is set to expire on December 31, 2016. It is our guess that the law might not be extended into 2017, but that may also be reliant upon the outcome of our upcoming presidential election. Stay posted to our website (www.yesnerlaw.com) or email me at Shawn@YesnerLaw.com for details on the MDRA as they develop.
In this episode, we interview Kathryn (Katie) Davis with AFLAC. Oftentimes clients come to us because of a major medical issue that drains their funds. If the medical incident is severe, it may create a shortfall in the budget causing the mortgage, credit card bills and other debts to fall behind. Plus, hospital and doctor bills are often a major factor causing people to file for bankruptcy. AFLAC provides short term relief. Katie and I discuss the advantages of AFLAC, why someone may want to purchase AFLAC, and how AFLAC will provide some relief when a major (or accidental) medical procedure is necessary.
Katie can be reached by email at Kathryn_Davis@us.aflac.com.
Welcome back to another episode of the podcast. We try to keep each episode to a maximum of 10 - 12 minutes and last week's topic was too big to squeeze into one episode, and we will likely devote more episodes in the future.
In Part 1, we discussed those investors who want to flip properties to create cash. In this episode we discuss real estate investor strategies for those clients who want to buy and sell contracts. We also talk about strategies to buy and hold property, to build wealth.
This episode of the Yesner Law Podcast is dedicated to our real estate investor clients. In this episode we discuss real estate flips or simultaneous closings. Where can investors get in trouble with these types of deals? How can real estate investors protect themselves in these types of transactions.
Please also check out a friend of the lawfirm, Tyler Sheff, with The Cash Flow Guys and his podcast. You can find Tyler at www.CashFlowGuys.com. Tyler is one of the real estate investors that we think does things properly and his podcast is devoted to helping new, and experienced, real estate investors.
This is Part 1 of two podcasts devoted to this topic. Please check back next week for Part 2.
As always, if you have questions on this topic or any future topic, please email me at Shawn@Yesnerlaw.com or visit our website at www.yesnerlaw.com. You can also find us on Social Media on Facebook, Linkedin, Google+ and other social media sites.