Can I be taxed after foreclosure?

Guest

For home foreclosure is it true that i could be taxed? What if i file bankruptcy can i get away without paying the tax ????? Need advice please

Niicss · Posted: Fri Nov 11, 2005 11:43 am Post subject: RE

Hi, Tocaso

The answer to your question is yes and no by order. The process is not that simple as it looks.

Under 16th amendment, IRS gets to tax your income. IRS expects that the borrowed money will be repayed by you, so it doesnot tax income which is only a loan. But if a creditor forgives your loan for any reason and you dont have to repay it then IRS takes that loan to be your ordinary income and make it taxable.

When a mortgage is forecloses by a lender it usually sells to the highest bidder. Sometimes its quiet possible that lender may not get the full amount of the loan and the amount left is considered as deficiency. And if that deficiency is not charged to you then the amount is considered as your income by IRS and gets taxable.

For filling bankruptcy, if you file that under chapter 7 or chapter 13 before the foreclosure has been completed then the loan will be discharged. The liability of a loan is now off from you and creditor has got nothing to forgive you. A bankruptcy filed soon enough will waved off both the the liability or the debt you own and the tax.

Thanks

Niicss Smile

Guest

Thats a quick answer niicss and a helpfull one too...
I like this forum, thanks for this fast service.

Tocaso

Niicss · Posted: Fri Nov 11, 2005 11:47 am Post subject: RE

Thanks tocaso for the comment.

All i tried to solve your query, hope to see you again if you have any query.

Niicss Very Happy

Guest

One more thing, you have mentioned the IRS twice. What is this IRS??????

Niicss · Posted: Fri Nov 11, 2005 11:52 am Post subject: RE

IRS is Internal Revenue Service - Department of Treasury.

Its a US government agency responsible for tax collection and tax law enforcement.

Niicss

Guest

Thanks again, I will surely come to you if i need to get any answer on any subject.

Thanks once again.

Samantha · Posted: Fri Nov 11, 2005 1:27 pm Post subject:

Hi Tocaso,

Welcome to MortgageFit Forums.

Most of the information has been provided by Niicss. I would just like to add some more for your benefit.

In a foreclosure the municipal tax lien is most superior one compared to all other liens (not considering Federal Liens) including first and second mortgages.

In case the property taxes or other municipal obligations are not paid, the state laws permit the municipality to place a lien against your property, preventing the transfer of title to some other until the debt along with the fees and interest is paid off. This law differs from state to state.

Hope this information will help you.

Thanks Niicss you have answered covering it all. Those were real rich information. You are helping our community always and I take this opportunity to thank you for this.

God bless you.

Thanks,
Samantha

Guest

are retirement funds protected from Creditors and the IRS for the sake of owing the above tax on a foreclosed property thx

smithsussane · Posted: Mon Jan 05, 2009 12:09 am Post subject:

Hi agon!

Welcome to forums!

As far as I know, retirement funds are protected from creditors and creditors cannot garnish the accounts to recover their debts. But as far as IRA is concerned, they can garnish your retirement account.

Feel free to ask if you have further queries.

Sussane

Guest

I have lost over. 10 Properties as investore put all savings into it trying to save husbandss prop. His name only we have llc but prop werein persoanl names we get schedule k1 from company but always have had lost even rolled over losses? Will we be taxed on ifference of foreclosure mort balance ? So far no judgements - acc to my dad. The mort comp only has 30 days to do judgement, so if not done do they still get u for balance of loan and what if pro doesn't sell at foreclosure steps etc.? Thanks just need to know how all this works want to sleep.

jenkin7 · Posted: Wed Nov 18, 2009 12:32 am Post subject:

Hi sh,

If the property goes into foreclosure and there is a difference between the amount you owe and the sale price, you will be responsible for the deficiency. But is the mortgage in the LLC's name? In that case, you would not be personally liable for the mortgage. Otherwise, you will have to pay off the deficiency. In case the property does not sell at the auction, the lender may buy the property and sell it as REO property in future.

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