Compare Mortgage Quotes

irishjeanie · Joined: 30 Oct 2008 Posts: 2 1.77 Dollars($)

WE paid $355,oo for our house and put in more than $50,00 in improvements, the house has been for sale for 4 months, and has fallen out of escrow 4 times because the buyers couldn't qualify for loans. we had to move to an assisted living facility which is very expensive, and cannot move back in to the house. We heard that giving a deed in lieu will be considered income for tax purposes. Why isn't this considered a loss for income tax purposes,because we lost all our equity?

smithsussane · Posted: Thu Oct 30, 2008 8:59 pm Post subject:

Hi irishjeanie!

Welcome to forums!

You can request for a deed-in-lieu when you are unable to pay the mortgage dues to the lender. In the process of deed-in-lieu, once you deed back the property to the lender, he will try to sell it in the market and recover the debts. However, there remains a deficient amount between the sale price of the property and the actual amount owed by you. If the lender forgives this deficient amount, it will become taxable and you will have to pay the taxes. This deficient amount has nothing to do with the equity of the house.

Feel free to ask if you have further queries.

Sussane.

greg1 · Posted: Fri Oct 31, 2008 11:49 am Post subject:

You would not be subject to paying income taxes if the lender waives the deficient amount.

Presedent Bush passed a law called The Mortgage Forgiveness Debt Relief Act of 2007 which states you will not have any income tax consequences.

Guest

house was flooded in 2010, in 2009 mortagage co. sent letter saying not in flood zone so dropped flood ins since i could not pay it if not in escrow house is not livable and i cannot afford house payment and rent and to fix house also it will probably again this spring since it has snowed a lot this winter and the flood was in September, southeastern part of SD was declared a disaster (house in Trent, SD)

riseabove · Joined: 09 Nov 2009 Posts: 277 11.01 Dollars($)

deed in lieu sounds like a good option for you, if the lender will accept it of course. Otherwise you might want to look at other options like Ch7 bankruptcy.

Company	Loan Type	APR	Est. Pmt.
				Go
				Go
				Go
				Go
				Go
				Go

Property State:
Property Type:
Credit Rating:

All times are GMT - 7 Hours

Page 1 of 1

Compare Mortgage Quotes

does deed in lieu of generate state and federal income taxes?