I know for a fact that if you didn’t refinance the original loan then it is non-recourse. There cannot be a deficiency judgement against you and nor can there be any tax liabilities. Of course as always double-check with a CPA as sdr said.
If you refinanced however, there are huge problems including possible deficiency judgements and/or IRS tax liability. I asked another question about this whether it only applies to cash-out or not.
I would imagine definciency judgements are much better because you know how the IRS is about money owed to them 🙂 From what I’ve read many lenders will discharge the loss and issue 1099 resulting in huge tax liability for the borrower.
I think there was a bill in congress to change this legislation but not sure what is the state of that.
I know for a fact that if you didn’t refinance the original loan then it is non-recourse. There cannot be a deficiency judgement against you and nor can there be any tax liabilities. Of course as always double-check with a CPA as sdr said.
If you refinanced however, there are huge problems including possible deficiency judgements and/or IRS tax liability. I asked another question about this whether it only applies to cash-out or not.
I would imagine definciency judgements are much better because you know how the IRS is about money owed to them 🙂 From what I’ve read many lenders will discharge the loss and issue 1099 resulting in huge tax liability for the borrower.
I think there was a bill in congress to change this legislation but not sure what is the state of that.
You are right about a 1099, but you might be liable for capital gains tax on a nonrecourse loan. The clients that I am working with are planning to see a CPA next week, so after they meet with him/her I’ll hear more about it, and get all the juicy details 🙂 I’m not sure if that congress bill address capital gains tax after foreclosure, I know it addresses the debt forgiveness tax from short sales/foreclosure.
You are right about a 1099, but you might be liable for capital gains tax on a nonrecourse loan. The clients that I am working with are planning to see a CPA next week, so after they meet with him/her I’ll hear more about it, and get all the juicy details 🙂 I’m not sure if that congress bill address capital gains tax after foreclosure, I know it addresses the debt forgiveness tax from short sales/foreclosure.
You are right about a 1099, but you might be liable for capital gains tax on a nonrecourse loan. The clients that I am working with are planning to see a CPA next week, so after they meet with him/her I’ll hear more about it, and get all the juicy details 🙂 I’m not sure if that congress bill address capital gains tax after foreclosure, I know it addresses the debt forgiveness tax from short sales/foreclosure.
You are right about a 1099, but you might be liable for capital gains tax on a nonrecourse loan. The clients that I am working with are planning to see a CPA next week, so after they meet with him/her I’ll hear more about it, and get all the juicy details 🙂 I’m not sure if that congress bill address capital gains tax after foreclosure, I know it addresses the debt forgiveness tax from short sales/foreclosure.
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