Posted on: 07th Jul, 2009 10:50 am
i am currently in a chapter 13 bk. i would like to dismiss the bk and surrender the home in a deed in lieu of foreclosure, but my attorney is saying the tax burden would be great. just looking for any other suggestions.
Hi ddkador,
In case of a deed in lieu, you would be able to surrender the property to the lender provided he agrees to it. The lender will forgive the deficient amount resulting from the sale of the property. Taxes can be charged on this forgiven amount because it would be considered as your income. However, depending upon your state laws, you may not have to pay the taxes. You will have to check your state laws first.
In case you find that your state laws do not forgive the taxes on the forgiven amount, you can apply for a short sale. However, you should remember that in a short sale, you'll have to pay the deficient amount resulting from the sale of the property to the lender.
In case of a deed in lieu, you would be able to surrender the property to the lender provided he agrees to it. The lender will forgive the deficient amount resulting from the sale of the property. Taxes can be charged on this forgiven amount because it would be considered as your income. However, depending upon your state laws, you may not have to pay the taxes. You will have to check your state laws first.
In case you find that your state laws do not forgive the taxes on the forgiven amount, you can apply for a short sale. However, you should remember that in a short sale, you'll have to pay the deficient amount resulting from the sale of the property to the lender.