For Those Of You Thinking Of Walking From Your Home Obligation Via Short Sale
A short sale may clean your financial shorts if you are not careful.
Ask your tax accountant, if you owe $40,000 more than your home is worth, and if your bank agrees to relieve you of the obligation and sell via a short sale, do you owe taxes on the home you just lost?
He just might say you were relieved of a $40,000 obligation. He might also say that is all taxable income. Now you might wonder, is a short sale the way to go?
Unfortunately, Larry - it might be the best choice among worse alternatives.
I received a call yesterday from a past client whose friend is needing to sell her home. She purchased it last August from her landlord.
Her financial situation has changed for the worse, and she can no longer make the payments. She paid at least 10% too much for the home, and will not have the funds to bring to closing to sell it at a market price.
A short sale is her only hope… If I can get both the primary and secondary lenders to agree.
Paying the taxes on the gain she never saw will be better than a foreclosure with a deficiency judgment.
I will blog about this when I get more of the facts, as I am infuriated by the appraisal that this she apparently received.
Doug, here is a solution I am involved with now: My clients are the buyers. There is a $50,000 short. The seller has agreed to a no interest promisory note to the bank for the shortfall. He is agreeing to pay 160.00 per month to save the tax bite and the foreclosure on his credit report. Take a look. lar