Posted on: 18th Feb, 2009 06:27 pm
We have a property which we vacated in November. It was on the market since March and did not sell (we tried a short sale but the mortgage company said the offers were too low). We have a first and second on the property which is through the same company. They approved us for a deed-in-lieu but want us to pay money towards the loan, I don't like the terms of the loan and got a lawyer beofre signing papers. We were told we would get a 1099 form for taxes next year but I'm not sure for what. Is it the difference of what we owe versus the appraisal value or what we owe versus what they sell it for? How does the money we pay effect the difference? We already bought another house which my parents needed to co-sign for us to get so I'm not worried where I am going to live, so is a foreclosure better at this point? What would we need to pay in that situation?
Hi lv2teach!
Welcome to forums!
If you go for a deed in lieu, the deficient amount resulting from the sale of the property is forgiven. The forgiven amount is considered as an income by the IRS and the taxes are charged on it. As far as a foreclosure is concerned, the lender can demand the deficient amount resulting from the sale of the property. If you do not want to pay the deficient amount, then deed in lieu is a better option for you.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
If you go for a deed in lieu, the deficient amount resulting from the sale of the property is forgiven. The forgiven amount is considered as an income by the IRS and the taxes are charged on it. As far as a foreclosure is concerned, the lender can demand the deficient amount resulting from the sale of the property. If you do not want to pay the deficient amount, then deed in lieu is a better option for you.
Feel free to ask if you have further queries.
Sussane
Is the deficient amount from what we owe versus what its appraised at or versus what they get for the house? Also, how do I claim insolvency to counter act the 1099 form I will receive?
Hi Holly,
The deficient amount is what you owe minus what they get for the house. If the lender forgives the deficient, then you will be receiving the 1099 form. I don't think, IRS will forgive the taxes on forgiven amount.
Thanks
The deficient amount is what you owe minus what they get for the house. If the lender forgives the deficient, then you will be receiving the 1099 form. I don't think, IRS will forgive the taxes on forgiven amount.
Thanks