Posted on: 02nd Feb, 2009 11:16 pm
I've been trying to do a lot of research on this, but I haven't found any concrete information.
But does anyone know the California law for short sales / foreclosures on income taxes? I have 2 loans and both are nonrecourse loans. I know that means that both of my lenders cannot go against for for the deficiency. But what about taxes? I've read that in California, nonrecourse loans are not taxable income?
I tried reading the following page which I found on a previous post, but I'm not sure if I understand it correctly. It talks about foreclosure, but would that also apply to short sales?
w w w .irs.gov/newsroom/article/0,,id=174034,00.html
2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
* Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.
But does anyone know the California law for short sales / foreclosures on income taxes? I have 2 loans and both are nonrecourse loans. I know that means that both of my lenders cannot go against for for the deficiency. But what about taxes? I've read that in California, nonrecourse loans are not taxable income?
I tried reading the following page which I found on a previous post, but I'm not sure if I understand it correctly. It talks about foreclosure, but would that also apply to short sales?
w w w .irs.gov/newsroom/article/0,,id=174034,00.html
2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
* Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.
Hi guest,
Cancellation of debt is not taxable in case of non-recourse loans. Whether you go for foreclosure or short sale, the rules for taxes on canceled debt are applicable in both cases. So, if you have non-recourse loans, the lender won't come after you for the deficiency. But you won't be required to pay taxes on the unpaid deficiency.
Take care
Cancellation of debt is not taxable in case of non-recourse loans. Whether you go for foreclosure or short sale, the rules for taxes on canceled debt are applicable in both cases. So, if you have non-recourse loans, the lender won't come after you for the deficiency. But you won't be required to pay taxes on the unpaid deficiency.
Take care
I am trying to do a short sale in california. I did a cash out refi 3yrs ago. I have a 1st IndyMac and a 2nd TD Wells fargo. The 1st will approve the short sale but will not waive the deficiency. The 2nd will cancell the debt after the short sale.
Question:
1. Will IndyMac come after me.
Question:
1. Will IndyMac come after me.
Hi milehigh,
If your property is short sold, your first mortgage holder, IndyMac, will have the right to come after you for the deficiency. They can garnish your wages, sue you and put a lien on your other properties, if you do not pay the difference. However, you can go negotiate with the lender and work out a repayment plan to pay off the deficiency.
If your property is short sold, your first mortgage holder, IndyMac, will have the right to come after you for the deficiency. They can garnish your wages, sue you and put a lien on your other properties, if you do not pay the difference. However, you can go negotiate with the lender and work out a repayment plan to pay off the deficiency.
I owes 1.66m loan , bank has agreed to short sale at $700000 balance will be considered as payoff. what will be my tax liabilities. please explain in details.
Thanks and have a great evening.
suren sheth
Thanks and have a great evening.
suren sheth