I am exploring my options to keep from going bankrupt. If I refinanced my home, took my 50,000 equity then foreclosed what would the income tax from the 50k come to?
2007-10-05 12:08:11 · 5 answers · asked by iboughtanightmare 2 in Business & Finance ➔ Personal Finance
zero but you might have some capital gains!!!
2007-10-05 12:49:15 · answer #1 · answered by Anonymous · 0⤊ 2⤋
Taking a loan against your equity is NOT income. There is NO income tax. If you have $50,000 equity in your house, you can't go bankrupt anyway. If the BANK forecloses (YOU can't), you can't keep the $50,000. If you get a loan with the INTENT to default, you can be charged with CRIMINAL FRAUD. That means your creditors can find you behind bars.
EDIT: To both people that mentioned capital gains: Any loans have ZERO effect on the amount of any gains.
2007-10-05 19:49:26 · answer #2 · answered by STEVEN F 7 · 1⤊ 0⤋
When you default on a loan and the lender takes back your collateral (your house), if they sell it for less than the total of your outstanding loans, then the IRS takes the position that your 'foregiven' loan is actually income for taxation purposes.
So to answer to your question: what is the total amount of debt on your home, and how much could the bank sell it on the open market? The gap between those two numbers is taxable income to you.
Check with a CPA or registered tax professional for a complete answer.
2007-10-05 19:30:56 · answer #3 · answered by Tom-SJ 6 · 0⤊ 0⤋
ZERO.
Its not income its a loan. You could have some capital gains issues when you sale your property. But its still not income. Talk to your accountant.
2007-10-05 19:13:38 · answer #4 · answered by financing_loans 6 · 1⤊ 1⤋
As you have stated this "problem", there would be no income tax, as you are borrowing against your house.
2007-10-05 19:30:22 · answer #5 · answered by Nothingusefullearnedinschool 7 · 0⤊ 0⤋