Tax Question

[includemeout]

Gotta be a expert or two here , so this is the question:

If your mortgage company is offering a "Settlement" payoff substatualy less than the loan what are the tax liabilitys if you take them up on the offer??

Could not get Ditec to do anything and now they are making an offer at about .10 cents on the dollar WTF..............wished they would have done this before we sold most everything staying afloat for nearly 3 years without a job

 

[WearyMicrobe]

Ask if they are going to file a 1099, if so the difference is INCOME. Which depending on balance can be pretty hard on you at 33%

 

[includemeout]

Ask if they are going to file a 1099, if so the difference is INCOME. Which depending on balance can be pretty hard on you at 33%

Wifey is inquiring about the 1099................ouch , that could be around $54,000 before any deductions

Any suggestions???????????

 

[WearyMicrobe]

Wifey is inquiring about the 1099................ouch , that could be around $54,000 before any deductions

Any suggestions???????????

Going to depend on them, get a tax guy to look it over before you sign. If they take the deduction for non payment someone is going to get stuck with the bill. If its a striaght buyout, I have no idea how the laws work in your state.


IANAL, IANATA just some advice after some friends went through the same thing

 

[includemeout]

Going to depend on them, get a tax guy to look it over before you sign. If they take the deduction for non payment someone is going to get stuck with the bill. If its a striaght buyout, I have no idea how the laws work in your state.


IANAL, IANATA just some advice after some friends went through the same thing

In Cali also..........Hi Desert.....and the paper says " may have tax consequences"

 

[OCBob]

Not sure Jerry, but I think you might be ok. Cali has very liberal laws on this. For example in a lot of states you have to pay tax on any 2nds, etc that you took cash on and then default on, but not here. You might be in luck my friend. I hope so, cause I know where to find your ass now, hehehehe.

 

[WearyMicrobe]

Not sure Jerry, but I think you might be ok. Cali has very liberal laws on this. For example in a lot of states you have to pay tax on any 2nds, etc that you took cash on and then default on, but not here. You might be in luck my friend. I hope so, cause I know where to find your ass now, hehehehe.

Thats not exactly true. If you refinance your initial mortgage and take cash out you lose the protection of a no fault state as it is no longer your first mortgage, at least in California.

There are a few outstanding gov. bills that allow you to default and avoid the double hit but YOU NEED TO TALK TO A TAX GUY. Every single situation is different, depends on the first and second older releasing debt and all the other stuff that gets pulled in.

If you have two debtors make absolutely sure that they are both satisfied in the deal. Because it would suck to have one done get hit with a tax bill then follow up with a second.

The piece of mind of a tax professional is worth the cost.

The IRS is not forgiving, after a 45K total federal bill last year they came back on 510$ worth of undeclared income to me. They do not fool around.

 

[includemeout]

Not sure Jerry, but I think you might be ok. Cali has very liberal laws on this. For example in a lot of states you have to pay tax on any 2nds, etc that you took cash on and then default on, but not here. You might be in luck my friend. I hope so, cause I know where to find your ass now, hehehehe.

Indeed you do Stopped paying as they would not do anything on the 1st, now that we have their attention offers are on the table. It may be we can get the Debt Relief thing going and be able to do away with the 2nd altogether as they will never get anything if the 2nd forecloses they would have to pay off the 1st leaving them with a house to sell at a total loss................Hmmmmmmmmmmmmmmmmmmmm choices, choices

But, still would have to come up with a fair chunk off change.

just think, if the trustee of my parents estate had not screwed things up we would be alright. Cost me 25 grand to have him removed (parents passed 7 years ago) If all goes well the estate could be distributed in less than a year, although the ship is on the rocks now and the legal matters are still pending.
The estate was worth about $800,000 4 years ago, now will be lucky to get $300,000 split between the beneficiaries Then comes more court to recoup the difference from the former trustee, just hope there is time to get pulled off the rocks before the ship sinks. All this has been a long, long haul.

Btw, you will know where to find us either way things go bro

 

[includemeout]

Thats not exactly true. If you refinance your initial mortgage and take cash out you lose the protection of a no fault state as it is no longer your first mortgage, at least in California.

There are a few outstanding gov. bills that allow you to default and avoid the double hit but YOU NEED TO TALK TO A TAX GUY. Every single situation is different, depends on the first and second older releasing debt and all the other stuff that gets pulled in.

If you have two debtors make absolutely sure that they are both satisfied in the deal. Because it would suck to have one done get hit with a tax bill then follow up with a second.

The piece of mind of a tax professional is worth the cost.

The IRS is not forgiving, after a 45K total federal bill last year they came back on 510$ worth of undeclared income to me. They do not fool around.

This is exactly why we are doing more homework and will be talking with the
Pro's who deal in such matters however all input is good so we at least ask the right questions.

 

[TNVIPER]

You need a competent tax advisor........This is what I do and I cant advise you because I do not know all the facts but I will say that if your tax advisor knows what he is doing you probably will not owe any taxes on the loan forgiveness...There are different approaches to this..

 

[includemeout]

You need a competent tax advisor........This is what I do and I cant advise you because I do not know all the facts but I will say that if your tax advisor knows what he is doing you probably will not owe any taxes on the loan forgiveness...There are different approaches to this..

Hi Larry, this is Wifey...

I talked to a CPA briefly tonight after work, he said in a nutshell that if you are insolvent at the time you get the debt releif then you wouldn't be taxed. He said to take all assets (including beneficial interest in jerry's parent's estate that isn't distributed yet) and take all the liabilities and if the liabilities are more than the assets we would be ok. It would probably take about $28k or so to reinstate the first, pay off the settlement offered by the second and pay the balance due on the lease we are in until next March.

I told him I would have to figure out a way to borrow the money and he said that would create even more of a liability because the borrowed money would be incurred before it was paid out on the settlement.

He also said if they are offering to settle for $15,000, he would offer them less. They are probably only offering any kind of settlement amount because they know when it goes to sale next month they will get ZIPPPPP out of it.

If I can find someone to loan the money, once the settlement is paid to the second, that would leave some equity in the house and whoever I borrow it from could then become a new secured second.

Why in the hell do they wait until people are this far into a mess before they offer any kind of help? The first said I should download a modification application and get it to them asap. Right before the sale date I can call them and if they are still reviewing it, they could (not would, but could) postpone the sale date.

Anyway, thanks for reading and if anyone has any ideas or suggestions, we are open ...... We thought if we could end up my the grace of God salvaging this place, we could rent it out and go from there ....