2nd home losses and tax implications

[bobby]

I dont get it. this is foreclosure,not short sale, why would there be taxes?

[pencilneck]

Good question Bobby.

As long as it was a clear cut non-recourse loan and foreclosure there should be no tax implications.

If there were second loans involved, which are generally recourse loans I believe, they will probably have to pay income tax on any amount they previously owed after the foreclosure.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

[pencilneck]

Good question Bobby.

As long as it was a clear cut non-recourse loan and foreclosure there should be no tax implications.

If there were second loans involved, which are generally recourse loans I believe, they will probably have to pay income tax on any amount they previously owed after the foreclosure.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

[pencilneck]

Good question Bobby.

As long as it was a clear cut non-recourse loan and foreclosure there should be no tax implications.

If there were second loans involved, which are generally recourse loans I believe, they will probably have to pay income tax on any amount they previously owed after the foreclosure.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

[pencilneck]

Good question Bobby.

As long as it was a clear cut non-recourse loan and foreclosure there should be no tax implications.

If there were second loans involved, which are generally recourse loans I believe, they will probably have to pay income tax on any amount they previously owed after the foreclosure.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

[pencilneck]

Good question Bobby.

As long as it was a clear cut non-recourse loan and foreclosure there should be no tax implications.

If there were second loans involved, which are generally recourse loans I believe, they will probably have to pay income tax on any amount they previously owed after the foreclosure.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

[Nancy_s soothsayer]

I know two households in San Diego who HELOC’ed their primary homes in order to buy second homes, again in San Diego, in 2004-2005. They were totally convinced the gamble would pay off big time returns. There would be three scenarios I can think of:

1. Lets say if they and many others moved to the newly bought homes in 2006 and rented off the older homes for three years until 2009, they would still qualify under the 2-out-of-five years of free capital gains tax on the older house. They would look at selling the older house in 2009, conservatively, because longer term payments on two depreciating houses would cause a lot of economic damage to their net worth. Therefore, listing inventory would be high in 2009. That’s good for buyers looking to buy in 2009.

2. If they and many others decide to give up the newer house after living in it for two years (2006 and 2007) and move back to original house, they could try and rent out the newer house for three more years till 2010 and still qualify under the same tax-free law. But they must sell the newer house in 2010, adding to 2010 inventory.

3. Here’s what I like – after they finally come to realize any moment now that the multi-home gamble is a total loss, even if they wait another five years, they go back to the original house and sell the pricier, newer house this year or next. Second half of 2008 listing inventory and next year’s will be high.

I say, like in my past predictions, that after October 2009, many of these San Diego multi-home fools would have made up their minds already. Listing inventory will be high any way you slice it.

[Nancy_s soothsayer]

I know two households in San Diego who HELOC’ed their primary homes in order to buy second homes, again in San Diego, in 2004-2005. They were totally convinced the gamble would pay off big time returns. There would be three scenarios I can think of:

1. Lets say if they and many others moved to the newly bought homes in 2006 and rented off the older homes for three years until 2009, they would still qualify under the 2-out-of-five years of free capital gains tax on the older house. They would look at selling the older house in 2009, conservatively, because longer term payments on two depreciating houses would cause a lot of economic damage to their net worth. Therefore, listing inventory would be high in 2009. That’s good for buyers looking to buy in 2009.

2. If they and many others decide to give up the newer house after living in it for two years (2006 and 2007) and move back to original house, they could try and rent out the newer house for three more years till 2010 and still qualify under the same tax-free law. But they must sell the newer house in 2010, adding to 2010 inventory.

3. Here’s what I like – after they finally come to realize any moment now that the multi-home gamble is a total loss, even if they wait another five years, they go back to the original house and sell the pricier, newer house this year or next. Second half of 2008 listing inventory and next year’s will be high.

I say, like in my past predictions, that after October 2009, many of these San Diego multi-home fools would have made up their minds already. Listing inventory will be high any way you slice it.

[Nancy_s soothsayer]

I know two households in San Diego who HELOC’ed their primary homes in order to buy second homes, again in San Diego, in 2004-2005. They were totally convinced the gamble would pay off big time returns. There would be three scenarios I can think of:

1. Lets say if they and many others moved to the newly bought homes in 2006 and rented off the older homes for three years until 2009, they would still qualify under the 2-out-of-five years of free capital gains tax on the older house. They would look at selling the older house in 2009, conservatively, because longer term payments on two depreciating houses would cause a lot of economic damage to their net worth. Therefore, listing inventory would be high in 2009. That’s good for buyers looking to buy in 2009.

2. If they and many others decide to give up the newer house after living in it for two years (2006 and 2007) and move back to original house, they could try and rent out the newer house for three more years till 2010 and still qualify under the same tax-free law. But they must sell the newer house in 2010, adding to 2010 inventory.

3. Here’s what I like – after they finally come to realize any moment now that the multi-home gamble is a total loss, even if they wait another five years, they go back to the original house and sell the pricier, newer house this year or next. Second half of 2008 listing inventory and next year’s will be high.

I say, like in my past predictions, that after October 2009, many of these San Diego multi-home fools would have made up their minds already. Listing inventory will be high any way you slice it.

[Nancy_s soothsayer]

I know two households in San Diego who HELOC’ed their primary homes in order to buy second homes, again in San Diego, in 2004-2005. They were totally convinced the gamble would pay off big time returns. There would be three scenarios I can think of:

1. Lets say if they and many others moved to the newly bought homes in 2006 and rented off the older homes for three years until 2009, they would still qualify under the 2-out-of-five years of free capital gains tax on the older house. They would look at selling the older house in 2009, conservatively, because longer term payments on two depreciating houses would cause a lot of economic damage to their net worth. Therefore, listing inventory would be high in 2009. That’s good for buyers looking to buy in 2009.

2. If they and many others decide to give up the newer house after living in it for two years (2006 and 2007) and move back to original house, they could try and rent out the newer house for three more years till 2010 and still qualify under the same tax-free law. But they must sell the newer house in 2010, adding to 2010 inventory.

3. Here’s what I like – after they finally come to realize any moment now that the multi-home gamble is a total loss, even if they wait another five years, they go back to the original house and sell the pricier, newer house this year or next. Second half of 2008 listing inventory and next year’s will be high.

I say, like in my past predictions, that after October 2009, many of these San Diego multi-home fools would have made up their minds already. Listing inventory will be high any way you slice it.

[Nancy_s soothsayer]

I know two households in San Diego who HELOC’ed their primary homes in order to buy second homes, again in San Diego, in 2004-2005. They were totally convinced the gamble would pay off big time returns. There would be three scenarios I can think of:

1. Lets say if they and many others moved to the newly bought homes in 2006 and rented off the older homes for three years until 2009, they would still qualify under the 2-out-of-five years of free capital gains tax on the older house. They would look at selling the older house in 2009, conservatively, because longer term payments on two depreciating houses would cause a lot of economic damage to their net worth. Therefore, listing inventory would be high in 2009. That’s good for buyers looking to buy in 2009.

2. If they and many others decide to give up the newer house after living in it for two years (2006 and 2007) and move back to original house, they could try and rent out the newer house for three more years till 2010 and still qualify under the same tax-free law. But they must sell the newer house in 2010, adding to 2010 inventory.

3. Here’s what I like – after they finally come to realize any moment now that the multi-home gamble is a total loss, even if they wait another five years, they go back to the original house and sell the pricier, newer house this year or next. Second half of 2008 listing inventory and next year’s will be high.

I say, like in my past predictions, that after October 2009, many of these San Diego multi-home fools would have made up their minds already. Listing inventory will be high any way you slice it.

[Author]

Posts