Regardin Short Sale

Guest 0.10 Dollars($)

My question is in reference to a Short Sale. I have a property that I own for the last 10 years, I am currently renting it now because I bought a bigger house a year in a half ago at 600,000 dollars as a first time buyer /owner occupied . I am having a hard t time paying this property. The current value of my propety is $450,000. I would like to know if there is any tax ramification in the second property? I want to do a Short Sale, or is the lender going to do something with my first property that I now have for rent? The property has $200,000 equity. Do you think there will be a problem to do a Short Sale and to have any Tax ramifications?
Thank you for taking the time to answer my question. I look foward to
hearing for you soon.

Janeth Pazmino

Samantha

Hi Janeth,

As much as I understand, there are no tax issues involved with the second home. Regarding the first home, since it is now a rental/investment property, if there is capital loss because of short sale, you can offset it with any gain incurred throughout the tax year. Otherwise, the loss can be used to reduce your taxable income by maximum up to $3000 (for married couples filing separately, the limit is $1500) on a yearly basis. If the loss is higher than $3000, then it is carried forward to offset against income for the same amount ($3000) in future years.

To know about tax ramifications on canceled debt due to short sale, refer to an earlier discussion in forums.

Hope this helps...

God bless you.

Samantha

larry · Joined: 27 Jun 2007 Posts: 3051 428.03 Dollars($)

Hi Janeth,

Welcome to the forum.

After the short sale the lender may place a lien on your other property. He is not like to cancel you due debt as you have some secured property.

Best of luck,
Larry

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