Posted on: 22nd Apr, 2010 08:48 pm
We purchased a home in nv in 2004 for about 199k. We later refinanced for 260k. In 2007 my husband got out of active duty military. We tried to sell the property and were unsuccesful. We have been renting the property, and purchased what is now our primary residence in CA. Because of employment instability, and an increase in the nv property payment, we have been unable to keep up on our payments. We want to be rid of this rental property, but don't know what is our best option. Current market value on the home has dropped to 130k. What are the tax ramifications of our options, and if a deficiency judgement is made would it be on the difference between our loan balance and what the home is sold for?
you can apply for a deed in lieu of foreclosure in order to get rid of the rental property. while you go for a deed in lieu of foreclosure, your score will get reduced by 250 points but you won't be responsible for the deficient balance resulting from the sale of the property. the balance debts resulting from the sale would be forgiven. though the irs would consider this as an income, you may not have to pay the taxes depending upon the mortgage debt relief act.