Posted on: 09th Sep, 2009 04:31 pm
I plan on foreclosing on my rental home due to not being able to find a renter. I live in my second home which I plan to keep. I am upside down by about $90k on the rental, I understand deficiency judgments but can the bank put a lien on my current home that I don't own for the deficiency? In a worse case scenario would a BK get rid of that problem? Also if I get a 1099 form on the deficiency will that fall under the forgiveness tax seeing as I have lived in that home for 4 out of the last 5 years? Thanks
Hi unclebuck!
Welcome to forums!
If you are unable to pay off the deficient amount to the lender, the lender can place a lien on your other property in order to recover his dues. If you can pay off the deficient amount, then you shouldn't have to worry about the lien. It will depend upon your lender whether or not he would forgive your deficient amount. If the property is your principle residence and if you have a purchase money mortgage, then you can get it forgiven as per the Mortgage Debt Relief Act.
You can file bankruptcy and include the mortgage into it. If your bankruptcy is discharged, then you won't be personally liable for the dues.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you are unable to pay off the deficient amount to the lender, the lender can place a lien on your other property in order to recover his dues. If you can pay off the deficient amount, then you shouldn't have to worry about the lien. It will depend upon your lender whether or not he would forgive your deficient amount. If the property is your principle residence and if you have a purchase money mortgage, then you can get it forgiven as per the Mortgage Debt Relief Act.
You can file bankruptcy and include the mortgage into it. If your bankruptcy is discharged, then you won't be personally liable for the dues.
Feel free to ask if you've further queries.
Sussane
If it is your investment property then you will pay taxes on that deficient amount
Excellent site, keep up the good work
We rented out our first home for less than the mortgage payment still leaving us enough to afford a larger home. Our intent was not to make a profit but to rent it out long enough for the market to come back where we could sell it and break even. So the fact that we were not renting it at a profit then it couldn't be considered an investment property, right? Oh also we have lived in it for 4 out of the last 5 years. We want to qualify for the Mortgage Forgiveness Debt Relief Act if we have to give up the home due to financial losses. What do you think? Thanks
If it is nto yoru primary residence then you may not be abel to take the forgiveness act.
It cannto be a second hoem or a rental property
It cannto be a second hoem or a rental property
Primary residence is defined as living in the residence for at least 2 out of 5 years from the date that the bank takes the property back.
http://www.irs.gov/irb/2005-07_IRB/ar10.html
http://www.irs.gov/irb/2005-07_IRB/ar10.html
probably its good idea to talk to a tax consultant