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State of NV, deed in lieu of foreclosure

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mrfrodo_1 Joined: 09 Feb 2010 Posts: 1 1.30 Dollars($)	Posted: Tue Feb 09, 2010 2:14 pm    Post subject: State of NV, deed in lieu of foreclosure Like 0 Dislike 0 Primary residenc, no 2nd, loan mod not working, Mortgage almost 500k, Value 2/10 176k. Want to know if and how to avoid paying income tax if we go that route, i.e. Deed in lieu of foreclosure or if last resort is BK prior to forgiveness of debt. Value will take many, many years to get back to mortgaged amount.
savior70 Joined: 25 Mar 2009 Posts: 1895 Location: Florida 261.84 Dollars($)	Posted: Wed Feb 10, 2010 4:48 am    Post subject: Like 0 Dislike 0 Hi mrfrodo, If your property is underwater and it is sold for less than what you owe, there will be a deficiency. If your lender forgives this amount, it will be considered as your taxable income. But since you used the property as your primary residence, you can claim exemption from paying taxes under the Mortgage Forgiveness Debt Relief Act, 2007. The act exempts you from paying tax on the forgiven debt amount, if it's been discharged in the years 2007 through 2012 and if the property has been used as primary residence.
mr frodo Guest	Posted: Wed Feb 10, 2010 10:17 am    Post subject: TY Savior70, U truly are. Like 0 Dislike 0 One last question, when you state discharge, you do not mean bankruptcy discharge but just related to the Relief act. Obviously if the mortgage holder will not do the deed in lieu or short sale then obviously bankruptcy is the last legal recourse.

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