Posted on: 16th Nov, 2008 06:24 pm
I have a 380k mortgage on my primary residence. I have a first of 260k and a second of 120k. I am current on my payments but find myself living paycheck to paycheck , I have no savings and having to buy shoes oe clothes for my sons gives me ulcers. I need to get out.
I have been presented with a short sale or deed in luie forclosure? I found a non-profit company who claims that they can do the deed in luie forclosure and that I can walk away with clean credit, and no 1099 tax obligation. Is this possible?????
I have been presented with a short sale or deed in luie forclosure? I found a non-profit company who claims that they can do the deed in luie forclosure and that I can walk away with clean credit, and no 1099 tax obligation. Is this possible?????
Hi ycela!
Welcome to forums!
As far as I know, in a deed-in-lieu foreclosure, the lender forgives the deficient amount. But this deficient amount is considered as income by the tax department and thus, they charge taxes on it. Moreover, a deed in lieu foreclosure will also affect your credit score badly. It may fall down by 200 points. Before going for the non-profit company, I think you should speak to the lender and see if he agrees to give you a deed-in-lieu without any 3rd party intervention.
Thanks.
Welcome to forums!
As far as I know, in a deed-in-lieu foreclosure, the lender forgives the deficient amount. But this deficient amount is considered as income by the tax department and thus, they charge taxes on it. Moreover, a deed in lieu foreclosure will also affect your credit score badly. It may fall down by 200 points. Before going for the non-profit company, I think you should speak to the lender and see if he agrees to give you a deed-in-lieu without any 3rd party intervention.
Thanks.
What is the tax % they charge?
Welcome cam,
Are you speaking of the taxes charged on the deficient amount which is forgiven by the lender? I think it depends upon how much deficient amount is forgiven by the lender.
Are you speaking of the taxes charged on the deficient amount which is forgiven by the lender? I think it depends upon how much deficient amount is forgiven by the lender.