We all know, some people are just better at their jobs than others. If you are struggling with your home, please pay attention to if your Realtor asks you these questions. They couldn’t be more important to your future after a short sale! Tax liability is a concern after your short sale. How do you avoid owing the government for money you lost. Read below!
1. When did you purchase this home? Is the loan in place a purchase money loan? 2. Do you have a 2nd loan? If so, was it a HELOC (home equity loan – used for purchases other than the home)? 3. Is this home your primary residence? 4. Have you lived in this primary residence either the entire time you’ve owned it? Or at least 2 of the last 5 years? 5. If you are an investor – can you handle the tax liability? Or are all your assets under water, meaning you could claim technical insolvency? 6. Have you been paying your home owner’s insurance? 7. Have you been paying your HOA dues?
Many Realtors want to discuss how the “Anti-Deficiency” Statute will protect you from all tax liability! This is not the case – if your home is your primary residence, the Debt Cancellation Act of Congress should help you avoid tax liability.
For Investors – expect a 1099 on the loss for the bank. However, if you can claim technical insolvency, meaning your assets are worse less than you owe, which isn’t difficult in this real estate market. Then you avoid the tax liability.
Why would anyone pay taxes on income they didn’t make? It doesn’t make sense. Make sure your Realtor knows the consequences of a short sale and can refer you to a tax & legal professional.
- Property Managers Co-Ordinates The Owners And Tenants
- Renting Out Your Property – Viable Advice For Home Owners