rental property hassel

lindablea · Joined: 12 Mar 2009 Posts: 1 1.39 Dollars($)

My husband and I have 2 rental properties. We did not want to be landlords, it just happened. We downsized, and didnt like the product we purchased, moved to another condo, too small upgraded to larger unit. We now have 2 properties that are up side down. Worth less than we owe. When we have renters we are still out of pocker $1,700 monthly. Stress level is through the roof, we called country wide, they said cant help with mortage amount-do short sale, we just cannot afford to pay anymore, my retirment portfolio took a noise dive this years, like most, I've lost nearly 70% of my life savings. I just cannot output anymore. my porperties are in nevada, any recommendations are helpful. please help
what are my tax responsibilites? will the IRS forgive?

Niicss · Posted: Fri Mar 13, 2009 1:55 am Post subject:

Hi lindablea

You have mentioned that the lender has given you the option of short sale. You can go for a short sale and sell off the property. However, you should note that you will have to pay the deficient amount resulting from the sale of the property. You can check if the lender agrees to a deed in lieu foreclosure or not. In a deed in lieu foreclosure, you will not have to pay the deficient amount resulting from the sale of the property. However, you credit score will be badly affected and get lowered by 250 points.

However, in a deed in lieu, the forgiven amount can be taxed by the IRS. But depending upon your state laws, a portion of it can be forgiven.

Thanks.

solidaynathan · Posted: Fri Mar 13, 2009 9:24 pm Post subject: Dont forget...

the good tax deductions that a rental property can bring you.

I understand the stress of rentals, trust me. But instead of giving up and ruining your credit for the next decade, consider biting the bullet and putting your rentals on autopilot.

Hire a strong, reputable property manager that will handle the day to day stuff and put it behind you for a while.

Yes the $2k per month lay out is a lot, but the loss coupled with your mortgage interest deduction, and property depreciation should be doing you some good on your taxes. And check with your CPA, but maybe the nightmare properties are reducing your tax liability making the $2k not sting quite as much?

Just a thought, but what if you wait out the market in this fashion... and give the properties time to appreciate in value again, where will you stand?

I know its tough, but be sure to weigh all of the $ before bailing.

Best of luck!

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