tax consequences

irizarrymarilyn · Joined: 27 Oct 2007 Posts: 7 4.59 Dollars($)

Hi, I am in such a mess. I have 7 homes in the pre foreclosure phase. One is my personal residence. I won't go into all the gorry details, but everything has hit us at once. Till sept 2007 we had great credit. we did everything possible to honor our committements to the tune of going through all our savings and 100k in debt. I am deadly afraid of the tax consequences between
1099's and capital gain taxes if we short sale these homes. In the mean time I am also trying to save the only asett in our name that is paid for which is 9 acres of land, but this land really belongs to my sister that is ill and I am her conservator, but it's in my name. A realtor that just got a short sale offer on one of the houses was kind enough to tell me to check with a real estate lawyer or accountant, because I may end up oweing so much in taxes, that it would be better to just let them foreclose. If I file bankrupcy, they'll take the land for sure. My credit is going to be so screwed that I won't be able to buy a pencil on credit. I am more scared of the IRS, because they are ruthless
and their interest and penalties will never let us get out ot this nighmare. PLEASE, help me. Thank you soooo much

jameshogg · Posted: Wed Feb 20, 2008 9:44 pm Post subject: RE: pre-foreclosures on homes

Hi irizarrymarilyn,

Welcome to forums.

Oh god you seem to be in trouble. But I believe it's best to do short sales on the properties partly and then go for deed-in-lieu on the rest. This is because if the market condition isn't good you won't be able to get enough proceeds through the sale and it won't be possible for you to sell all at once. It might take some time, so better you take some responsiblity of selling few properties and give the rest to the respective lenders. But our credit willbe tarnished totally. Nothing doing.

Please don't mind but you have not been thinking of the consequences and gone for 7 homes. Do you rent out any of these properties? Is there any possiblity of conuing to pay the loans on 2-3 properties through rent payments, if any? Consult the lenders who've financed the respective homes.

Thanks

lisascherzer · Joined: 04 Jan 2008 Posts: 749 0.10 Dollars($)

If there is no equity in the properties then you may want to consider deed in lieu of foreclosure. Lenders wont come after you for defiency judgement as they would on a foreclosure. With the land, I would consult an attorney to see if you can put that in your sisters name or how that would be handled if you did file bankruptcy. Hope I could help but I do think that you should consult an attorney before making a major decision like this.

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