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kylecane
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Post subject: |
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| We purchased a home in Canton , Ga in February 2007. We were relocated to Tampa in 2009 where we are currently renting. We are in the process of shortselling our house in Canton. Would we qualify for the Mortgage Debt Relief Act? Thanks |
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Niicss
Joined: 03 Oct 2005
Posts: 4834
Location: New Jersey
508.88 Dollars($)
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Post subject: |
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| In case of short sale, the mortgage lender will want you to pay the deficient balance resulting from the sale of the property. In such a situation, the question of Mortgage Debt Relief Act won't arise. In case, the lender forgives the deficient balance resulting from the sale of the property, then you will be able to take advantage of the Mortgage Debt Relief Act. |
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confused123
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Post subject: Forclosure |
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Hello,
Our home foreclosed this month, and we were informed by our lendor that they cannot come after us (maybe bc we were first time buyers), but they also said they are sending us a 1099A form. What does this mean? Are we protected by the debt forgiveness act so we don't have to pay taxes? I think we have a non-recourse loan... so wouldn't that make us exempt from paying taxes also? So confused and trying to figure this out before the new year.
Thanks! |
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adonis
Joined: 22 Oct 2005
Posts: 10562
Location: ALASKA
1089.18 Dollars($)
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Hi Guest,
The deficient balance is forgiven by the lender and thus he will be sending you the 1099a form. You need to submit it when you file taxes. You will be liable for paying taxes for the forgiven debt. But depending upon the Mortgage Debt Relief Act, you won't be liable for paying the taxes.
_________________
Procrastination is the enemy of your financial success |
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Guest123
Guest
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Post subject: Hello Adonis |
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Thanks,
But since we have a California Non-Recourse loan, aren't we exempt from paying taxes? I don't think the MDRA applies to Non-Recourse... I think it only applies to Recourse loans.
Can you explain?
Thanks! |
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jameshogg
Joined: 20 Dec 2005
Posts: 10468
Location: Nevada
988.84 Dollars($)
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Post subject: |
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Hi Guest,
As your debts will be forgiven as per the state laws of California, you won't be liable for paying the deficient balance. So, the question of MDRA does not arise.
Thanks |
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rosie
Guest
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Post subject: Cancellation of Debt of a Foreclosed property |
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| I filed for chapter 7 bankruptcy, which included my primary residence. I had a first and a second loan on it. When I refinanced, the proceeds were used to payoff debt. My bankruptcy was discharged in 2006 and now the IRS says that I owe taxes on 95,000 dollars. Do I have to pay taxes on this money, even if I never touched a penny, nor did I go on vacations? All funds were sent directly from the Escrow office. |
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smithsussane
Joined: 18 Sep 2008
Posts: 10439
Location: Alaska
985.83 Dollars($)
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Post subject: |
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Hi rosie!
Welcome to forums!
I think you will have to pay the taxes to the IRS as some of the debts were forgiven in the bankruptcy filing. The forgiven debts will be considered as your income. You should immediately contact a tax adviser and take his opinion in this matter.
Feel free to ask if you've further queries.
Sussane |
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Guy in Foreclosure Nevada
Guest
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Post subject: Property getting foreclosed in reno nevada, i live in califr |
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Hi there,
Thanks for the helpful article.
I have a situation:
1. I have a primary residence in california. and I am current on it.
2. I also have a lot (vacant land) in Nevada. There is only first loan on it. No second loan or heloc on that. I am default on this for last 2 years. Now this property was reported to me going to foreclosue.
My question Is:
My credit score is already bad now. Can the bank come chasing me for the deficiency, harass me for that or not? Also, is it allowed to report a 1099 on me or not in this case.
LMK if there are questions.
Thanks in advance
Guss |
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smithsussane
Joined: 18 Sep 2008
Posts: 10439
Location: Alaska
985.83 Dollars($)
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Post subject: |
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Hi Guest!
Welcome to forums!
After foreclosure, the lender has the rights to come after you for the deficient balance resulting from the sale of the property. However, as you're staying in Nevada, the lender will have to file a lawsuit and get a judgment against you in order to come after you in California.
Feel free to ask if you've further queries.
Sussane |
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june robbins
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Post subject: Deficiencies |
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| Is a deficiency forgiveness of debt any different in a short sale than a deed in lieu of foreclosure? Does the IRS see it any differently? |
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jameshogg
Joined: 20 Dec 2005
Posts: 10468
Location: Nevada
988.84 Dollars($)
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Post subject: |
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Hi june robbins,
The IRS won't see the forgiving of deficiency balance in short sale or a deed in lieu of foreclosure as anything else. If the lender forgives the deficient balance, then you will be liable for paying off the taxes for that forgiven amount. However, depending upon the Mortgage Debt Relief Act, you won't be liable for paying any taxes on it.
Thanks |
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lefty2011
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Post subject: 1099a |
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| second mortgage lender agreed to participate in short sale with payoff of $25k of $230k owed, which then became a non-recourse debt, sent me a 1099a showing $205k, I reported on my income tax return as cancelled debt income, am I still liable for repayment of $205k? |
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adonis
Joined: 22 Oct 2005
Posts: 10562
Location: ALASKA
1089.18 Dollars($)
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Post subject: |
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Hi Guest,
If the lender has forgiven the deficient balance, then you won't be liable for paying the amount. However, you will be liable for paying taxes for the forgiven debt as it may be considered as your income.
_________________
Procrastination is the enemy of your financial success |
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downeysr
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Post subject: deed in lieu |
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| i file bankruptcy 2 yrs ago the mortgage was part of it there was no reaffirment pay the mortgage volintary now im behind on mortgage im doing a deed in lieu with them will i have have read that the amou nt forgive is taxable is this true |
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