If you are in the market to
purchase a Los Angeles home there are several benefits to buying at the end of the year. Besides the fact that there is less competition at the end of the year for Los Angeles homes because most people are busy with the holidays, this year sellers will be especially motivated to sell their home as quickly as possible due to the Mortgage Debt Relief Forgiveness Act benefit law that is set to expire on 12/31/12 and the looming threat of increased taxes on real estate sale proceeds next year.
In 2007 the federal government passed the Mortgage Debt Relief Forgiveness Act to eliminate thousands of dollars that the average American losing their home would normally pay for income taxes. The Mortgage Debt Relief Forgiveness Act exempts current homeowners from the hidden income taxes that are normally incurred when mortgage debt is forgiven. With this Forgiveness Act not in place the IRS will consider the mortgage debt wiped out without actually being paid back as income and tax it as such. Most industry experts expect the federal government will extend the Forgiveness Act before the end of year. Although, with the Presidential elections occurring just before the expiration timeline, there is increasing concern that this important Act could end up falling through the cracks.
As you can imagine, if a seller is upside down in their mortgage the expiration of this Forgiveness Act will motivated more homeowners to attempt and sell their property before the end of the year causing an increase an inventory. Since a lack of Los Angeles real estate inventory has been one of the market’s main driving forces this year, this Forgiveness Acts expiration along with the strong likely hood of taxes increasing next year (meaning sellers will pay more taxes on their sale profits) could be the right recipe for home buyers in Los Angeles to snap up a good deal in 2012. Some short sale servicers are even expediting these transactions to get a short sale closed before year’s end.
In this market where many homes are still underwater and retiring seniors are relying on the profits from the sale of their home, as a buyer, you might stand to benefit from the inventory changes. Please contact me with any questions and to discuss how I can assist you with your home search in the Hollywood Hills, West Hollywood, Los Feliz, Bel Air, Beverly Hills and the hills of the San Fernando Valley.