Mike Ceparano 813 417 6698
If you believe yourself to be insolvent than perhaps you could qualify under such circumstances. If you care to discuss further, please fee free to email me or call me. Regards.
If I'm understanding what insolvent means, I believe that I am. My debt to income ratio is pretty grim right now and I have owe way more money than I own assets. Purchasing this rental property was suppose to make matters better, but instead it added to my headaches.
Have you tried to negotiate a modification with the lenders? I do hear they are more willnig to do that now a days - that is, if you are willing to hold onto it.
Although I am not an accountant, I have been recently wondering about the logic of it and how this really will play out -
If you purchase something for $250,000. still has a balance of $200,000. Sold it for $170,000 with a net loss of $50,000 (including closing cost paid, commission, etc). So the lenders will 1099 you for $50,000, which will be your so called 'gain' - yes, ridiculous, from the lenders side.
But if we look at the whole picture, where you bought it for $250,000 and sold it for only $170,000; then paid commission, closing close of $20,000.
I wonder, per accountant and after you really figured everthing (purchase price, expenses, rental income, write off, depreciation, etc) and the $50,000 so called 'Gain' from lenders, willl you still be paying tax on this or not.
Like I said, the accountant might be able to sort this out.
Do you see what I am trying to say?
Alot of things occur when selling your home that you're upside down on.
1. First, you will need to demonstrate that you have a hardship in order to qualify with your Lender to sell your home as a short sale.
2. You will need to gather documentation of your hardship.
3. You will need to have a Sales offer on your home before your Lender will consider the Short Sale.
4. You will need to have a Buyer that understands and is willing to have patience in going through the Short Sale process as the sale will typically take longer than a traditional Real Estate transaction.
5. You will need a Realtor representing you that is knowledge in Short Sales as the documentation and negotiation process is critical to a successful closing.
6. Once you have had a successful outcome of selling your home as a short sale you probably have concerns in regards to any taxes that may or may not be payable. Your Lender will provide you with a 1099.
7. The Mortgage Forgiveness Debt Relief Act of 2007, set guidelines for your tax concerns: this pertains to your home being your primary residence and/or were you insolvent when your home is sold which would require a special form to be filed with your income taxes. This can be gone over more in detail should you have questions. However, with any tax issue you would always want to consult with a Tax Advisor as I would not want to provide you with tax advice.
8. Lastly, if your home has been sold as a Short Sale, you can now get on with your life looking forward to the day again in which you will be able to be a homeowner. This will vary depending upon your deliquency on your mortgage payments.
Your doing well by trying to find out all that you can about Selling Your Home As A Short Sale!
i am not a tax accountant so you really should consult a tax accountant on this. However, I just want to mention that you may or may not get a huge IRS bill on a short sale, depending on some very fine criteria set by IRS (as usual, that's why you need tax accountant).
However, in general, if your loan is all purchase money for your primary residence (meaning the only money you borrowed is for the original purchase money of your home, not an equity loan for remodel, purchase a car, pay off credit card bill, ..,etc), then you might not have to pay tax on the short amount.
Again, safest bet is to check with the expert - the accountant.
I know you asked about this a couple of weeks ago. With short sales you use to get hit with the difference of what was owed to the bank. Bush passed a bill last year stopping that. So you would not get hit with it.
Why don't you set up a time shen someone can come and better explain this to you in person. You have alot of good questions.