Posted on: 06th Nov, 2007 02:08 pm
I might be looking at 3 or 4 shortsales, I have gotten myself into big debt trying to avoid it, but there is no other way out, so I am so concerned about ending up oweing so much tax that I can't pay it, then have all those penalties and interest added and end up in an even worse financial situation. Do mortgage companies always 1099? My homes are in california and nevada.
Any suggestions on what to do. I recently moved to nevada, and don't know a really good accountant/tax person. I appreciate your time and imput
Any suggestions on what to do. I recently moved to nevada, and don't know a really good accountant/tax person. I appreciate your time and imput
Yes they usually do. Contact an attorney. I believe that for the rest of this year 2007 you don't have to pay the taxes. Again I am not an attorney so one is definately necessary. But if it is true and you sell this year you won't have to owe. There is nothing to say that it won't continue next year but that has yet to be determined, as far as I know.
Hello Marilyn,
The lender generally gives the 1099-C form to the borrower. He might as well send it to IRS where you have to claim the unpaid balance as income on your part and pay taxes on that. In both cases you are liable to pay tax.
The lender generally gives the 1099-C form to the borrower. He might as well send it to IRS where you have to claim the unpaid balance as income on your part and pay taxes on that. In both cases you are liable to pay tax.
Hi Marilyn,
If the lender exempts your debt then he will give you 1099-C form so that you will pay the tax on the exempted amount. I think Eric is right. You should better consult with an attorney on this regard.
Thanks,
Larry
If the lender exempts your debt then he will give you 1099-C form so that you will pay the tax on the exempted amount. I think Eric is right. You should better consult with an attorney on this regard.
Thanks,
Larry
I have 1 home that just went into foreclosure. I have 2 more homes that I don't know what to do...whether to foreclose or short sale. A friend of mine told me that the president passed some law that if you short sale the irs can't go after you with a 1099 for the remainder of the money. I live in AZ and I don't know what the ramifications will be for either the short sale or foreclosure. I have not had a salary in 8 months. I have no money coming in. Please tell me what can happen and is there such a law.
Thank you,
Michele
Thank you,
Michele
Michele,
You need to contact your lender. It will be up to them. Should they choose to accept a short sale or go to foreclosure. You are correct you may not have to pay the taxes on the difference for the rest of the year. After that we will have to wait and see what are lawmakers decide.
A short sale is typically better than a foreclosure.
You need to contact your lender. It will be up to them. Should they choose to accept a short sale or go to foreclosure. You are correct you may not have to pay the taxes on the difference for the rest of the year. After that we will have to wait and see what are lawmakers decide.
A short sale is typically better than a foreclosure.
Hi Michele,
Welcome to Mortgagefit discussion board.
Foreclosure should be your last option to choose. First all talk to your lender and see if he can help you out with some affordable options.
If no options suit you, you can request your lender for short sale or deed in lieu of foreclosure. I will rather suggest you to go for the Short Sale because it has less effects on your credit than foreclosure or deed in lieu of foreclosure.
"A friend of mine told me that the president passed some law that if you short sale the IRS can't go after you with a 1099 for the remainder of the money."
Yes if you can prove insolvency, you may not need to pay tax on the forgiven debt. That means say the forgiven debt is $50,000 and you have assets worth $0, then you need not to pay any tax on the forgiven debt. If you have assets worth $30,000 then you have to pay tax on the $ 30,000 amount. And if you have assets worth $50,000 or more, then you have to pay tax on the full $50,000 amount.
Do let me know if you have any other questions.
Thanks
Blue
Welcome to Mortgagefit discussion board.
Foreclosure should be your last option to choose. First all talk to your lender and see if he can help you out with some affordable options.
If no options suit you, you can request your lender for short sale or deed in lieu of foreclosure. I will rather suggest you to go for the Short Sale because it has less effects on your credit than foreclosure or deed in lieu of foreclosure.
"A friend of mine told me that the president passed some law that if you short sale the IRS can't go after you with a 1099 for the remainder of the money."
Yes if you can prove insolvency, you may not need to pay tax on the forgiven debt. That means say the forgiven debt is $50,000 and you have assets worth $0, then you need not to pay any tax on the forgiven debt. If you have assets worth $30,000 then you have to pay tax on the $ 30,000 amount. And if you have assets worth $50,000 or more, then you have to pay tax on the full $50,000 amount.
Do let me know if you have any other questions.
Thanks
Blue
Good news was published today that Congress passed the law and the President is expected to sign it that will exempt the homeowner from paying the tax on the amount you might still owe for a short sale. This may not apply to 2nd homes - so I would certainly be getting my financial and legal advice from an "up to speed" real estate attorney and CPA. You can call some Real Estate agents (they are everywhere) and ask for a referral for a good R.E. attorney where you are.
Good luck,
Rick
Good luck,
Rick
Yes Rick, that is the news and it's something really good for homeowners who are struggling to pay off their debt.
When borrowers default, they are burdened with the thought of paying off the mortgage and then added to it, there was the tax payment. Now, at least the burden will lessen a bit so we can expect borrowers and lenders negotiating with each other to resolve mortgage problems. But Rick, is it that the law is effective for the next 3 years only?
When borrowers default, they are burdened with the thought of paying off the mortgage and then added to it, there was the tax payment. Now, at least the burden will lessen a bit so we can expect borrowers and lenders negotiating with each other to resolve mortgage problems. But Rick, is it that the law is effective for the next 3 years only?
Yes, that's my understanding - a 3 year window. I think that's good news for all parties concerned - there are lots of investors and courses out there that teach how you can buy homs in "pre-foreclosure," i.e., short sales, for 50 and 60 cents on the dollar. Even if the lender would agree to that, the home owner could have had a big problem with that because they would have been on the hook for a huge tax hit.
With this law, the home owner in trouble is more likely to move forward with a short sale knowing that they don't have to pay the tax. Three years, I think, is ample time to sort this mess out.
With this law, the home owner in trouble is more likely to move forward with a short sale knowing that they don't have to pay the tax. Three years, I think, is ample time to sort this mess out.
I currently owe a second home in AZ. I have enough money to pay only maybe for 4 more months on my mortgage on my second home. Is it true that the lander will not let me do a shortsale if I have other assets, such as CD, stocks and 401K??
Hi Ola!
Welcome to forums!
When you apply for a short sale, the lender would judge your financial situation. If he is convinced about your hardship, then he would allow you to go for a short sale. If he feels that you have enough income or assets to pay off the mortgage, he would not accept a short sale request from you.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
When you apply for a short sale, the lender would judge your financial situation. If he is convinced about your hardship, then he would allow you to go for a short sale. If he feels that you have enough income or assets to pay off the mortgage, he would not accept a short sale request from you.
Feel free to ask if you have further queries.
Sussane
Sussane,
Thank you so much for your answer. I do have one more question pls. If I let go of my house and the house goes to forclosure, will I be taxed on anything, maybe on the diference that the mortgage is a and the sale price at the auction? If I forclose, can the bank go after my house in IL??
Thank you so much for your answer. I do have one more question pls. If I let go of my house and the house goes to forclosure, will I be taxed on anything, maybe on the diference that the mortgage is a and the sale price at the auction? If I forclose, can the bank go after my house in IL??
Hi Ola,
If there is a gain from the property, then you can be charged capital gains tax. If your property is foreclosed in Arizona, then your property is Illinois will not be affected. The lender will not go after your property in Illinois.
Thanks
If there is a gain from the property, then you can be charged capital gains tax. If your property is foreclosed in Arizona, then your property is Illinois will not be affected. The lender will not go after your property in Illinois.
Thanks
I bought a 2nd. home in Az, to help my son own a home later he had no credit, now his job had a pay cut he can;t aford to pay 1,100.00 a mo. I'm a widow with oly widow benef. and S.S. I can't afford either, he is moving out, he can't find a roommate either, the mtg. co. will not refinace it for me at lower rate, and the house is worth a lot less now, what can I do? I'm letting it go to foreclusere, can they come after me for my own home? or savings? Please help. Thank you. Tessa
Hi Tessa!
Welcome to forums!
If you let the property go into foreclosure, the lender can come after you for the deficient amount as the mortgage is in your name. If you cannot pay the deficient amount, the lender will have the right to place a lien on your property. However, if the lender forgives the deficient amount, then you won't have to bother about it.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
If you let the property go into foreclosure, the lender can come after you for the deficient amount as the mortgage is in your name. If you cannot pay the deficient amount, the lender will have the right to place a lien on your property. However, if the lender forgives the deficient amount, then you won't have to bother about it.
Feel free to ask if you have further queries.
Sussane