are you suppose to pay tax ( not property tax) on a condo what you are foreclosing on? something like a 1020 and it is adjusted to your income?
I am not sure but i think someone told me something like this.
2007-10-24 09:29:50 · 6 answers · asked by Eva Daniel Rn 4 in Business & Finance ➔ Renting & Real Estate
When a property is lost through foreclosure or sold as a short sale the lender or lenders will take a loss.
This loss occurs because on a short sale the property is sold for a value lower than what is owed currently to the lender. Same occurs in a foreclosure if the property is sold on a foreclosure proceeding at a value lower than what is currently owed to the lender.
Therefore, this loss (sales expenses, accrued interest, fees, etc) is taken by the lender as YOUR gain and by law the lender has to report this to the IRS by filling a 1099c form.
This form will have to be included in your regular income tax form you file for that year.
For example: If you make $70000/year and the loss taken by the lender amounts to $100,000 you could be liable to pay income taxes on a total income of $170,000.
BUT there are ways to avoid this tax burden if you are financially insolvent. Read my article "Homeowner's guide Short Sale/Foreclosure" to read all about this tax consequence. In this same article you will find the link to the IRS page where it explains how you can qualify to avoid paying this tax.
Disclaimer: I am not a tax advisor therefore you need to consult with a knowleadgeable CPA that can give you tax advice.
2007-10-24 10:16:45 · answer #1 · answered by SCCRealEstateUNCENSORED.com 3 · 1⤊ 0⤋
I'm not sure I fully understand your situation. However, if you have a mortgage or other loan on a property and it's in arrears and you want to foreclose, all that's happening is that you're forcing it to be sold. There may be a real estate transfer tax that has to be paid any time real estate is sold, like a sales tax. That might be what you mean. Check with the County tax office to get more info.
2007-10-24 09:42:46 · answer #2 · answered by AnOrdinaryGuy 5 · 0⤊ 1⤋
A really short version of the above is Yes, you have to pay income tax on any amount short of what you borrowed. You were given the money by the bank already, you bought a house with it. You paid no taxes at that time. Even though you had the income when you bought the home you will pay the income tax on it the year it is foreclosed.
2007-10-24 10:40:18 · answer #3 · answered by Landlord 7 · 3⤊ 2⤋
If the house is foreclosed on one of two things will happen. Either the lender will go after you for the difference of what it was sold for, and what you owe. Or they will forgive the difference in which case they will file a 1099 showing that because they wrote it off, it is considered as income to you. This is considered as income at the bonus level. When you get a bonus at work lets say end of year, that is taxes at a substantially higher rate then regular income, adding state and local it is usually around 30-35%. You will then be responsible for that amount of taxes to be paid to the local, state, and IRS. and they will get their money.
2007-10-24 12:26:46 · answer #4 · answered by Pengy 7 · 0⤊ 4⤋
The only issue I've heard of is that if you sell your home under what is called a 'short sale', you are getting the benefit of paying off less than what is owed. The difference may be taxable. Whichever, it will may hurt your credit.
You may have to list the sale of the home on your 1040. If you receive any renumeration the closing attorney will have to show it.
2007-10-24 09:38:34 · answer #5 · answered by Venita Peyton 6 · 0⤊ 1⤋
in case you separated by June 30, 2010 and in no way had a unmarried overnite through Dec. 31, you could document head of higher 0.5 and toddlers the loan is his legal legal responsibility, he claims the loan pastime
2016-10-22 22:55:59 · answer #6 · answered by Anonymous · 0⤊ 0⤋