Posted on: 27th Mar, 2009 04:54 pm
Couple of questions about a foreclosure (or probable one) in Northern CA:
1. We have been told by the lender (Countrywide), HUD, FHA, etc. that we don't qualify for a loan mod - main reason being we have too much unsecured debt. Husband was laid off and we were advised by CW to stop paying mortgage in order to possibly qualify for program - we still don't.
Should we bother with trying a short sale? The property taxes are due in a couple weeks and they aren't cheap ($3500). I don't want to pay the taxes if I don't have to if the house is going to foreclosure anyhow. Should I pay them?
2. What are the tax implications of foreclosure - will I get some kind of bill from the IRS if it goes to foreclosure?
1. We have been told by the lender (Countrywide), HUD, FHA, etc. that we don't qualify for a loan mod - main reason being we have too much unsecured debt. Husband was laid off and we were advised by CW to stop paying mortgage in order to possibly qualify for program - we still don't.
Should we bother with trying a short sale? The property taxes are due in a couple weeks and they aren't cheap ($3500). I don't want to pay the taxes if I don't have to if the house is going to foreclosure anyhow. Should I pay them?
2. What are the tax implications of foreclosure - will I get some kind of bill from the IRS if it goes to foreclosure?
Hi
A short sale is worth trying in your situation. It is less damaging on you credit score than a foreclosure. But you will be required to pay the deficient amount due to the short sale.
You need to pay the property taxes. Otherwise, the IRS would put a lien on the property and no potential buyer would be interested in buying a property which is has a lien on it.
If you go for a foreclosure, the deficient amount is most likely to be forgiven by the lender and this is considered as your income by the IRS and thus is taxable. However, you can avail tax exemptions on this forgiven amount under the Mortgage Forgiveness Debt Relief Act.
A short sale is worth trying in your situation. It is less damaging on you credit score than a foreclosure. But you will be required to pay the deficient amount due to the short sale.
You need to pay the property taxes. Otherwise, the IRS would put a lien on the property and no potential buyer would be interested in buying a property which is has a lien on it.
If you go for a foreclosure, the deficient amount is most likely to be forgiven by the lender and this is considered as your income by the IRS and thus is taxable. However, you can avail tax exemptions on this forgiven amount under the Mortgage Forgiveness Debt Relief Act.
If we are going to let it foreclose, do we need to pay the property taxes?
I figured that if it went to short sale, or deed in lieu that we would - but wouldn't it be the county that would put the lien?
Anyhow, we already have a lien on the property that was filed by a family member from whom we borrowed some of the down payment. So no short sale there as they won't release the lien.
I figured that if it went to short sale, or deed in lieu that we would - but wouldn't it be the county that would put the lien?
Anyhow, we already have a lien on the property that was filed by a family member from whom we borrowed some of the down payment. So no short sale there as they won't release the lien.
Hi Liz,
You need to pay the property taxes, else the county would put property tax lien on it. The property would not sell if the property tax lien is not removed.
You need to pay the property taxes, else the county would put property tax lien on it. The property would not sell if the property tax lien is not removed.