Which is the best option to dispose an upside down investment property? & legal & tax consequense of each one

Asked by George, California Wed Mar 11, 2009

Which is the best option to dispose an upside down investment property? & legal & tax consequense of each one?
This property has a non-recourse purchase loan.
1. Deed in Lieu of froeclosure? Will one get a 1099 also?
2. Short Sale and
3. Foreclosure.
Also, if one has decided not to keep this property anymore, would Deed in Lieu of foreclosure be the quickest way to give property back to lender & save accrured interest & foreclosure expenses?
Please kindly advise, Thanks

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Leticia Soto…, Agent, Chino, CA
Thu Apr 14, 2011
The best way to dispose of such property is by doing a short sale. You will need an experienced and qualified agent in your area to handle it and make sure it is done correctly with no recourse.
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John Paul Da…, , Rancho Cucamonga, CA
Mon Mar 16, 2009
Generally speaking the best thing to do is to attempt a short sale on the property. In this case you are really in the driver's seat with non-recourse loans. Why not avoid a foreclosure on your credit report if possible? I buy short sales if they fit my investment criteria, if not I market them for retail sale. Give me a call or send me an email if you are interested in discussing your options in further depth. Good luck!
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Diana Margala, Agent, Rancho Cucamonga, CA
Thu Mar 12, 2009
Hi George:

The best solution would be a loan modification if you and the home qualify. Depending on what is owed and if there is 2nd will determine the likely hood of a short sale, which are usually the 2nd best options. Weather you do a Deed in Lieu or a foreclosure it is my understanding that they will impact your credit the credit the same.
• As for the taxes speak to an accountant but you may qualify for an exemption check out form number 982C. Here are the resources that might help to answer:
• Frequently asked questions on the Mortgage Forgiveness Debt Relief Act
• Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
• 1099-C
• Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments

Each situation is different and not something that could be given a blanket answer. If you like contacts me and I can look up the information and give you a better educate answer.

Good Luck
Diana 909-945-5763
Web Reference:  http://www.Dianam.com
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