Hello Zombody. Frankly, you are very unique as most home owners facing foreclosure would not consider paying their property taxes. I certainly have never encountered a home owner who still wanted to pay property taxes after the bank declined. Let me ask you. What would be the benefit to you to pay this installment of the property taxes? Obviously, if you don['t pay, you can't deduct it from your taxes, but whether that would make a difference in your case, is a question your tax adviser. The other question is, what happens if you don't pay (aside from not getting the tax dedution). If you have already accepted that the property is going to foreclose and there is no chance that the foreclosure will be stopped, it really does not make any sense to pay the property tax. While it's been already due, you just don't incur a penalty if you pay by 12/10, paying the property tax will be the bank's responsibility if the property goes back to the bank or the new owner's obligation if a third party buys the property at the trustee sale. Property taxes are not personal obligations. They are secured by a lien on the property that stays attached to the property even after a foreclosure. Were you not able to short sell because the lender refused to approve the short sale or did you not receive any offers for your property? The way I see, unless there is a compelling reason for you to pay the taxes in 2010 (a reason other than the due date and avoiding penalty for late payment), I can't see an advantage to paying the property taxes at this juncture. If the trustee sale should be postponed and your short sale attempt continues, you can always pay the taxes later. Chances are, if the short sale should still be approved after all, the lender will most likely agree to pay the taxes, meaning that they won't ask you to come up with out-of-pocket because the taxes are still owed. Your 1099 for the debt forgiveness might be higher than it would be if the bank does not have to pay for the taxes, but whether that will make a difference for you is again a question for your tax adviser. I hope this helps.
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Ferdig Real Estate Solutions