Hi Chris, it’s been awhile since my last post.  I wanted to find out if a person does a short sale on their house and the property is upside down and the house is sold for less, can the bank or lender come back years later and request that you pay the difference on the property?  I saw this on the news one night.

Also, We are going thru our second loan modification and my husband and i have been talking about letting the house go.  We can’t afford the property taxes and we are struggling every two weeks.  What is the best way to do a short sale or would a short sale help? Should we let the house foreclose?  Please advise.  We are in desperate need of help.

starrlights Short Sale:Seller, Tax Issues

I live in my home that I have been in for 7 years as my primary residence.  This is the only home I own.  If I sell my home first, then purchase another home on the heels of the sale, but afterward, am I eligible to claim the $6500 tax credit (assuming eligibility for time periods, income, etc.)?

If no, then would the above scenario change if I owned two homes to begin with and kept the non-owner occcupied, selling just the primary?  How about if I moved into the non-owner occupied in the interim time before purchasing the next primary residence?

khseallen Tax Issues

I know IRS capital gains statutes define principal residence req’ments as being lived in for 24 of 60 months etc. But IRS publication 4681 which deals with Debt Forgiveness defines a Principal Residence (on pgs 7 & as “the home where you ordinarily live most of the time. You can have only one principal residence at any one time” Am I wrong in interpreting this to say there is no statutory time frame for which the home must be occupied as a principal residence? I was told by a CPA that he could not find a time frame requirement of principal residence in the debt forgiveness statues and this seems to support his opinion.

asharpone Tax Issues

We’ve attended the seminar in Temecula.  We’ve considered loan modification however the possible new payment is still too steep; I have to move due to my job in the military.  We are  in the process of a short sale.  I have one loan and have never refinanced.    Will I have to pay tax on a successful short sale?

Thanks.

otooleij Short Sale:Seller, Tax Issues

Chris - thank you again for the valuable service you and your team are providing

I submitted a complicated question some time ago regarding a rental property we have in Las Vegas and the interest-only loan and large passive income loss which is occurring - at the time, we were unsure if we could qualify for another loan here in CA - but it appears we can and we are proceeding with a purchase (Lord-willing) - to get into a home here in CA before we are forced to decide (once the interest-only rate adjusts) what to do with the huge loss of a rental property in Vegas and subsequent impact on our credit scores and ability to obtain financing here -

Would we be able to fully deduct the mortgage interest on a second home property here in CA as a primary residence - and also deduct the interest on the rental property in Vegas? - I believe there is a rule regarding some “personal” time which we must spend in the Vegas property in-between rentals in order to deduct the interest there as well? - any assistance would be appreciated.

mckrueger Tax Issues

I have a short sale going.  The lst, GMAC, has accepted the package and is willing to pay the 2nd, National City Mortgage, $3,000 (2nd is $63,000).  National City Mortagage will not respond.  Can they force me into a foreclosure?  Note:  It was a 2nd, but they say it was a equity line.  They wanted me to pay $13,000 + $3,000 they would get from GMAC.  But since I told them I can’t, they will not respond.  Both loans were re-financed to a lower interest rate about 2 yrs. ago.  No money taken just  lower interest rate.  They did tell me they would come after the $63,000 if I did not agree to the offer. 

Theresa

tyasment Short Sale:Seller, Tax Issues

Hello Chris, and to your wonderful panel;

I attended your Jan. meeting and it was like a hope-full light which shown through some thick dark clouds.   Thank you Chris, and all the experts who are participating for your caring stewardship, it is much appreciated.

I have 4 investment homes plus the house I live in.  In about the 4th quarter of 2006, 3 of my houses had become  vacant all together and needed major repair & maintenance, along with paying the property taxes and insurances, which wiped out my reserves, plus I took out of credit cards to supplement the expenses.  My action plan was aimed at repairing the homes and getting them up and rented as quickly as possible.  Then the thought was that I would sell 1 to 3 of them and pay back the credit cards, put some of the monies on reserve, and use some of it to put my daughter through college (which she started on Sept. 07).

Dampend by my Dad’s illness, and passing away early last year, repairing the houses took longer then expected, and so once it came time to consider selling them the value of the houses just took a steady dive.  And so instead of riding about $400,000 positive on equity I’m now riding about that much negative.  Plus I have the added expense of having to cover the credit card debt.

In May 08, I let go paying the mortgage on one of the houses to see what impact that would create overall.  I thought that this house would go into foreclosure about 5 months later, but instead the lender, barely, last month approved a short-sale for about $165,000 less then I bought the house for - but then the person who put in the offer backed down.

With the help of a not so experienced realtor (since I could not find a more experience realtor who was willing to assist with all this), we have pursued short-sales on the other investment homes.  For the most part, the lenders say that they will not consider a short-sale unless the houses are in default at least 3 months.  Therefore, starting last month I stopped paying the mortgages on the other investment homes.  But, I am leaving on (and carrying the expense of) the utilities and yard maintenance, so far on the vacant properties.

I guess that at this point the outcome I’d like is to wipe the sleight as clean as possible, or as you said in today’s posting - bow gracefully and back away, without getting deeper into debt; nor incurring a major tax burden, even if it means me going into bankruptcy (which at this point I don’t really know much about).  Ideally, I’d like to keep my current home, especially since I have my elderly Mom living with me.  But that loan payment is due to go up about $1000 in a couple of years, and so I would need to do a loan modification on it, in order to keep it.

At this point I have an appointment to speak with a Springboard debt counselor, in about 2 weeks (they said they won’t meet with people if you are filing for bankruptcy, only for debt management), since I understand it to be a requirement for filing for bankruptcy.  Prior to positioning myself in this mess, my credit has always been real good; but this thing is wipeing me out down to the roots, I’m just hoping that I’m still breathing when I land.  Could you please tell me if there is anything more that I can do at this point, such as talking (face-to-face) with some experts (such as yourself Chris, a real estate and/or bankruptcy lawyer)?

In added graditude, I’ll say that one of the hardest things I have found, in this investment learning trip, is to find individuals who can see, and play the whole picture (real estate, escrow, lending, law (foreclosure, short-sale, bankruptsy), Taxes, investing, etc.), your brilliant set-up not only creates this individual, it puts it out there for the rest of us to benefit from.  Thank you once again for this brilliant set-up.  I look forward to your responses.

AMWT Loan Modification, Miscellaneous, Short Sale:Seller, Tax Issues, Training Classes

My husband and I bought our house in 2007 and when we received our prop tax bill for the year it was over $6,000.  We didn’t have the money to pay it or last years taxes.  We had our house re-assessed but it still didn’t make a difference, the taxes are $6,000.  We owe close to $13,000 for property taxes for the past years plus late fee.  Is there any assistance out there to help us to pay this.  We love our home and we don’t want to lose it.

We have called the Tax Collector, they can start a payment plan, but they want 20% of the total bill to start it off.  We don’t have the money.

We need a light at the end of the tunnel

starrlights Tax Issues

I owned 5 homes.  I lived in Home number 1 for 5 years and then my parents moved in.  I then moved to home number 2 and lived there for 2 years.  I them moved into home number 3 and rented out home number 2.  I lived in Home number 3 for 3 years and then I moved into home number 4 and this is where I currently live.  Home number 5 was an investment property and was purchased as an investment property.  Each of the home loans 1-4 were taken out an owner occupied.  I have refinanced all of them except the home I currently live in.  I used the money that I took out to upgrade the properties by landscaping, pool ect…  I have now lost all but the home I live in to forclosure.  I just started getting the 1099-c in the mail.  I currently have no money and am barely making my bills everymonth.  I am not sure if this means I am insolvent or not?  On my 1099-C I was given an amount of debt was written off and an amount the property was worth at the time it was forclosed on.  What does this mean as far as the tax implications for me.  In addition, what is the difference between a 1099-a and a 1099-c?  Any help would be greatly appriciated.

summer1234 Tax Issues