Posted on: 20th May, 2007 08:20 pm
Hi,
What is the tax ramification (by the IRS the state o CA) for a deed in leiu of foreclosure? Thanks
What is the tax ramification (by the IRS the state o CA) for a deed in leiu of foreclosure? Thanks
I have a home with 2 mortgages and a condo that I own with no mortgage.
I haved a 2nd home, it is rented and was an investment. The value is less than the mortgage by 100,00. Will my condo be in siezed if I do a dil on the 2nd home? I live in Florida.
I haved a 2nd home, it is rented and was an investment. The value is less than the mortgage by 100,00. Will my condo be in siezed if I do a dil on the 2nd home? I live in Florida.
Hi,
It is unlikely that your condo will be foreclosed if you do a deed in lieu on your second home. The condo has no mortgage on it and you own it outright, and I believe it is not used as collateral for the loan on the second home. In that case, there doesn't seem to be any chance of your condo being seized by the mortgage holder of the second home.
It is unlikely that your condo will be foreclosed if you do a deed in lieu on your second home. The condo has no mortgage on it and you own it outright, and I believe it is not used as collateral for the loan on the second home. In that case, there doesn't seem to be any chance of your condo being seized by the mortgage holder of the second home.
Angel,
I am just one of those who has been puzzled with the influx of information, so I will tell you what I found out so far.
If the line of credit was acquired when you purchesed your home (assuming it is you primary residence) from what I read all over the place is that it is considered the purchase money loan and there should be no federal tax ramifications for Carlifornia. Refer to the IRS publication 4681. But you might have to pay the California state tax on the forgiven debt, since California was only excluding the cancellation of debt from income during 2007 and 2008. I hope they extend it to 2009, otherwise we are in trouble..
I am just one of those who has been puzzled with the influx of information, so I will tell you what I found out so far.
If the line of credit was acquired when you purchesed your home (assuming it is you primary residence) from what I read all over the place is that it is considered the purchase money loan and there should be no federal tax ramifications for Carlifornia. Refer to the IRS publication 4681. But you might have to pay the California state tax on the forgiven debt, since California was only excluding the cancellation of debt from income during 2007 and 2008. I hope they extend it to 2009, otherwise we are in trouble..
Hi, I see that if you want to go through with this, you need to write a letter stating your reasons....Well, my reasons are no other than this property did a 360 and now is a gut wrenching "ghetto", complete with daily gunshots and murders right outside my front door!!!! I was trying to raise children there but, unfortunately, we had to run for our lives...literally!! Anyway, my question is do I be completely honest with the mortgage company? Or do I omit that part of it? I'm afraid if I'm honest that they won't even think about taking it back!!!! Please Help Me!!!! Thanks so much!!!
Hi sleepinbeauty,
If you think the lender will not want to take back the property if you disclose all information about the property, you do not have to tell them everything. Tell them that you are in financial crisis and you want move into a different house. By the way, what have you planned to do? Do you want to do a short sale or a deed in lieu on the property?
If you think the lender will not want to take back the property if you disclose all information about the property, you do not have to tell them everything. Tell them that you are in financial crisis and you want move into a different house. By the way, what have you planned to do? Do you want to do a short sale or a deed in lieu on the property?
my wife purchased a house in alabama and the seller had a 1st mortgage at the bank. the seller did a wrap-around mortage in 2007 with the bank and the banks attorney's knowledge and approval. my wife filed for homestead exemption in 2007. the bank and their attorney had the seller to sign them a deed in lieu of foreclosure in sept. 2008. this was done without our knowledge or approval until after the fact. the bank started contacting me and telling me it was a better deal for us to allow them to transfer property into our name. in feb. 2009, i signed a mortgage and note with the bank. the bank notified me by email that they had been sent the tax statement for 2008. the amount was over double the homestead amount. i went to the court house and was advised that the bank had never recorded deed in my name. it was still in the banks name. i went and talked to the banker and he said that he had given me credit for the taxes on the closing statement but when he looked, he had not given me any credit. he attempted to call the attorney but he was not in and he said that he would call me back. ove 36 hours and i have not heard from him.
Hi hstan,
It sounds strange that the banker told you he had changed the property deed in your wife's name, whereas no such deed was recorded. Since previous owner of the property was transferred the house to the banker through deed in lieu, the title to the property had been in the banker's name. But if he had indeed transferred the property to your wife, it should show on the public records. I think she should talk to a real estate attorney in this regard. Unless her name is on the property title, how would she claim her ownership rights to the property? She needs to find ways to put her name on the title and she also needs to know whether the lender had actually transferred the title in her name as they claim they have done.
It sounds strange that the banker told you he had changed the property deed in your wife's name, whereas no such deed was recorded. Since previous owner of the property was transferred the house to the banker through deed in lieu, the title to the property had been in the banker's name. But if he had indeed transferred the property to your wife, it should show on the public records. I think she should talk to a real estate attorney in this regard. Unless her name is on the property title, how would she claim her ownership rights to the property? She needs to find ways to put her name on the title and she also needs to know whether the lender had actually transferred the title in her name as they claim they have done.
What are the tax consequences if I did a deed in lieu in the state of Florida since mortgage forgiveness debt relief act of 2007 is only good up until the end of 2009?
Hi question,
The Mortgage Forgiveness Debt Relief Act of 2007 is applicable to debts discharged in years 2007 through 2012. Thus, if you qualify for the tax exemption under the debt relief act, you do not have to pay any taxes on the amount of the cancelled debt. To know more on this you can refer to the IRS site at "http://www.irs.gov/individuals/article/0,,id=179414,00.html".
The Mortgage Forgiveness Debt Relief Act of 2007 is applicable to debts discharged in years 2007 through 2012. Thus, if you qualify for the tax exemption under the debt relief act, you do not have to pay any taxes on the amount of the cancelled debt. To know more on this you can refer to the IRS site at "http://www.irs.gov/individuals/article/0,,id=179414,00.html".
Can NY borrowers (property is in Florida) be sued for the difference in the outstanding loan amount if the property sells for less?
Hi Patti,
In Florida, deficiency judgments are allowed in judicial foreclosures. If your property is foreclosed and the house sells for less than the loan amount owed, you will be responsible for the deficiency. Once the lender gets a deficiency judgment against you, they can garnish your wages, put liens on your other properties and come after your back accounts.
Thanks,
Jerry
In Florida, deficiency judgments are allowed in judicial foreclosures. If your property is foreclosed and the house sells for less than the loan amount owed, you will be responsible for the deficiency. Once the lender gets a deficiency judgment against you, they can garnish your wages, put liens on your other properties and come after your back accounts.
Thanks,
Jerry
i have lost my job a year ago times are tight and i am a month behind ...which is the better option for us we want out of our house .. we are willing to short sale if it will sell i do not think it will sell anyways because i live in flint michigan but i need to know what is a better path?
To chief,
If you want to move out of this property, you can first try and short sell it. A short sale has a less damaging effect on your credit than a foreclosure. However, given the market situation, if it does not short sell you can request your lender to accept a deed in lieu of foreclosure.
If you want to move out of this property, you can first try and short sell it. A short sale has a less damaging effect on your credit than a foreclosure. However, given the market situation, if it does not short sell you can request your lender to accept a deed in lieu of foreclosure.
So if i have a vacation property purchased for $500K and the bank took it back as deed in lieu. They sent a form 1099 stating value as $200K and currently have it for sale for 300K. Is the value disputable?
Hi petey,
What value does the 1099 Form show as $200k? Is it the fair market value of the property? The fair market value does not necessarily have to be same as the price you bought this property for. Fair market value is an estimate of the current value of the property. Given the market condition, the fair market value of the property could well be far less than what it was purchased for years ago. However, you do not have to pay any taxes, if the fair market value of the property listed on the 1099 Form is more than the principal amount you owe.
What value does the 1099 Form show as $200k? Is it the fair market value of the property? The fair market value does not necessarily have to be same as the price you bought this property for. Fair market value is an estimate of the current value of the property. Given the market condition, the fair market value of the property could well be far less than what it was purchased for years ago. However, you do not have to pay any taxes, if the fair market value of the property listed on the 1099 Form is more than the principal amount you owe.