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would we be taxed?

Posted on: 14th Jul, 2009 08:40 pm
I NEED HELP!! My husband and I started the short sell process with our lenders, but 4 months later we do not have a response. We are not late on any of our payments, but have realized we made a HUGE mistake purchaing this house a little over two years ago. We had a plan to try and buy a new house before the short sell hit our credit, but we are about to start escrow on the new house and still have not heard anything about the old house. Currently, our taxes show the old house as a primary, but it will not be as soon as we get the new house. Will we then be responsble for all the taxes if we do a deed in lieu? Is it possible to do a deed in lieu right before the new escrow closes so it wont cancel that out, but yet the old house still looks like our primary residence and then we dont pay taxes?
I KNOW THIS IS CRAZY....ANY HELP/GUIDANCE WOULD BE GREATLY APPRECIATED!!
ltilden

Welcoem to the forum

Are you refering to the property tax.

As fro as I know you are responsible for the property taxes as long as the house is in your name.

Can you clarify please

Good luck
Posted on: 14th Jul, 2009 08:51 pm
I am referring to the difference in the price we bought the house for and what it sells for.Don't we have to pay some sort of taxes? Not property but, isn't it counted as income?
Posted on: 14th Jul, 2009 08:57 pm
ltilden


Ok got it

You are not goign to pay captial gain taxes on the profit

This is the rule. After you buy and live in your primary residence for 2 years and you buy a second home and you move in to yur second home and still do not sell the primary, you will not pay taxes on the profit if you sell the house with in 5 years of moving out

But if you sell the house first and made profit out of it, you need to reinvest that profit in to another primary residence with in two years of sale to avoid the capital gain taxes

good luck and feel free to ask
Posted on: 14th Jul, 2009 10:10 pm
Hi ltilden,

In case of a deed in lieu, the deficient amount resulting from the sale of the property will be forgiven. Depending upon your state laws, you may not have to pay the taxes for the forgiven amount. However, you won't be able to purchase a property immediately after you go for a deed in lieu. You can first purchase the new property and then go for a deed in lieu on the earlier property.
Posted on: 15th Jul, 2009 12:22 am
Adonis is correct as realtes to 'Deed in lieu".

I was refring to the scenario when you sell your current house after you buy a new house
Posted on: 15th Jul, 2009 09:30 pm
When you go for a deed in lieu, you simply hand over the property to the lender. The lender then sells the property and tries to recover the unpaid mortgage balance. So, you don't need to pay capital gains tax because you're not selling the property. When you give away property to the lender, it is no longer your primary residence. Regarding the property tax payments, well, I think you need to clear any dues before you transfer the title of the property to the lender.

In a deed in lieu, you don't need to pay the deficient amount, that is, the difference between the mortgage balance and the sale price. Depending upon your state laws, you may or may not have to pay any taxes on the deficient amount, which is then considered as income.

Hope this helps..

May god bless you

Samantha
Posted on: 18th Jul, 2009 05:15 am
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