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RealtyTrac: Florida is No. 1 in U.S. Foreclosures

According to national real estate monitor and resource RealtyTrac Florida is No. 1 in U.S. Foreclosures. Winter Park real estate attorney Eric Lanigan has seen Port St. Lucie, Miami, Palm Bay-Melbourne-Titusville, Orlando Florida clients where foreclosure has hit the hardest in the first quarter of 2014.

RealtyTrac: Florida is No. 1 in U.S. Foreclosures

  • Florida is No. 1 in foreclosure in the nation with 1 in every 407 homes in some stage of foreclosure 
  • Of the 10 major metro areas in the U.S. with the highest foreclosure rates in February, five were in Florida
    • Palm Bay-Melbourne-Titusville
    • Tampa ranked
    • Jacksonville
    • Miami
    • Port St. Lucie 

RealtyTrac reports that the following Florida cities had the nation’s leading number of foreclosure filings in the first quarter of 2014: 

  1. Port St. Lucie, Florida: 1 in 99 housing units had a foreclosure filing
  2. Miami: 1 in every 106 
  3. Palm Bay-Melbourne-Titusville: 1 in every 112
  4. Orlando: 1 in every 120
  5. Tampa: 1 in every 122
  6. Lakeland: 1 in every 127
  7. Ocala: 1 in every 130
  8. Jacksonville: 1 in every 134

Difficult Florida Foreclosure Issues

One of the most alarming things a homeowner who had a foreclosure in Florida in 2013 may face is the receipt of a tax bill owed after a foreclosure for what is being called “shadow income.”

Shadow income is the relative value of a home that may have been sold through short sale, caused by home foreclosures or canceled debt. While the homeowner doesn’t get a penny from the home, it may be construed as income. 

This issue may only be clarified by a real estate and or a tax attorney. Florida happens to be one of several states that is no longer covered by the Debt Relief Act which ended December 2013. Homeowners are at risk for taxes owed on amounts of debt forgiven in foreclosure, short sale or mortgage refinance.

Normally, tax law treats any type of debt forgiveness as a financial benefit, even if it comes at the expense of the homeowner.

The situation varies by individual hardship faced. For example if a homeowner of some financial means decided to “let a home go” through foreclosure to be rid of a bad or unwanted debt. Then there are homeowners who faced hardship in the form of job loss, medical bills, catastrophe, extreme financial loss, which didn’t allow them to protect their property via foreclosure defense. 

At the end of a foreclosure, the loss of the home didn’t come as income to the homeowner, the home instead went immediately to the lender. The federal government would normally expect its cut of the sale in taxes.

Homeowners in many states are being protected by laws passed to prevent sellers from paying taxes on “shadow income” caused by home foreclosures or canceled debt.

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