Posted by Mark Haugsten on January 04, 2003 at 09:17:38:
Good news
So I get Loss Miti to AGREE to the lower price, then I have the gains??
Tax consequences of debt forgiveness - Posted by Mark Haugsten
Posted by Mark Haugsten on January 04, 2003 at 05:32:10:
Dwan and Sharon wrote an article entitled “No Equity = Big Bucks”. In the course of this article they describe scenarios wherein they get the Loss Mitigation Officer at a bank to discount a first by about $67,000.00
Does’nt this debt forgiveness become imputed as $67,000 in additional income to the person who had the loan in their name in the year it is given? I certainly thought so.
I mention it because I did not want to encounter a situation where a family working its way out of financial difficulty gets a sudden Notice of Deficiency 2 years after doing such an abatement deal for the tax + penalty + interest, which on an additional $67,000 approaches $30,000.
Additionaly I do like the tactic, and I think I have a ripe mnarket for it, here in Austin. However, if I am going to have 200 to 300 people hit hard in a couple of years I would not feel good about it.
Mark Haugsten
Austin, Texas
Mark Haugsten
Austin, Texas
Re: Tax consequences of debt forgiveness - Posted by JHyre in Ohio
Posted by JHyre in Ohio on January 04, 2003 at 08:34:26:
If you acquire title to the home and the owners are off the hook for the loan, they are treated as having sold the home for the amount of the total mortgage debt. If they’ve lived in the home for 2 of the last 5 years, they should be off the hook for any federal income taxes. In addition, if they can prove insolvency at the time of the sale, they are off the hook for any gain, up to the amount of the insolvency.
John Hyre