Hi, Stars -
First off, I understand that it's likely that none of us are CPAs or are qualified to give tax advice; that said, I have a potential seller who abandoned her primary residence perhaps a year ago and hasn't had anyone living there since. Does anyone have experience with this in relation to the Mortgage Debt Relief Act? Would she be eligible for tax relief on this property?
**********************************
like buttons
Replies
I have sold vacant home and this did not effect the tax consequences for the seller. I live in Arizona which is a Deed of Trust state. I don't think this matter as it is a national tax. Like you state I am not a tax advisor.
Read IRS Pubication 4681 Debt Cancellation. It may help your client without thr MDRA. A CPA told me she uses this as her primary debt relief.
Those are great reference links - thanks as always, Bryant!
Google is our friend :)
What is this Google thing everyone keeps talking about? :)
Bryant, good resource link! At the link, scroll to next page and it verifies house qualifies as long it hasn't been used for rental or biz. It doesn't have to be currently occupied as primary residence.
Well now you have me thinking. Our current home, which we may or may not keep or sell short is our primary residence UNTIL we get approved for the offer we have made on a different property short sale. I was very happy about the Debt Relief extension.
Our current home is in a golf resort! We rent our Guest House (not the main house) on a weekend, for an annual event here called Coachella Festival. Rock bands from everywhere come here, and we do rent our Casita. I even cook breakfast for these kids that come and stay! But we don't leave. The casita is already booked for 2013 Coachella!
Does this mess up the option to sell short, if we decide to do so?
Thanks!
Susan, Since you are buying another home now it could hurt you. You would have to show valid hardship (and supporting financials) at time of short sale review (and likely again when offer presented) to support the case for a short sale. You would have to include in your documentations earnings from rent from it as well as last 2 years of tax returns (all pages) and all assets and financial documents. You can certainly short sale rentals and investment properties - and ones that are P/T rentals (but they may not qualify for tax relief though on deficiency- would need to see a CPA). It all depends on when you sell and your financial situation (how the balance sheet looks) and your hardship then. You will need to explain why you had to buy your new home and can not afford payments on your current home.
Definitely talk to a CPA, but it seems that since it WAS your primary home at the time you financed it, it would qualify, as long as you don't turn the whole property into a rental. Renting part of it seems to make it trickier.
-
1
-
2
of 2 Next