Hi All,
I am planning to do a short sale on a rental property in state of CA. I bought this property in Sept 2005 and lived there for 3 years, then moved out to be closer to work. Since 2009, i have been renting this property at a loss - my rent is 1600, while my mortgage and other dues are 2600.
I want to short sale as I don't intend to carry this loss any more. However, I am concerned about the following questions:
1) Will the banks require me to pay the deficiency (of over 125,000) because this is now termed as rental property (as per my recent tax returns)? And will I have to pay tax on the deficiency?
2) Will banks settle for a short sale since my current income shows that I can afford the payments ?
Appreciate inputs.
Thanks
Tags:
Rajesh,
Under the new MARS rules he may not charge you an up front fee. I have closed similiar deals in Northern & Southern California and do NOT charge an up front fee as it is forbidden by the DRE. Get a 2nd opinion!
Stephen Shafer
Rajesh H said:I met with local Real Estate attorney today to clarify my questions. Apparantly, he is real estate broker as well specializing in short sale. He charges $2500 for the whole process of short sale. His value proposition for the fee is that he would make sure that the short sale/foreclosure won't affect me a lot, and he would word the contract to seek a sale that is favorable to me.
Has anyone heard of this type of deals?
Hi Rajesh & All,
Looks like this thread is been inactive for almost a year, which is good thing so I hear how things went since then. I am in the same situation and hoping to get your feedback and see if you could share your experiences with Short Sale (SS) process.
I live in North CA (SF South Bay) and own a rental property in Contract Costa county. I lived in that house for almost 2 years before I turned it into a rental property. I have been living in a townhouse (SF South Bay) which is my primary residence and is mortgaged with WF.
The rental property 5/1 ARM loan is with Citi and the loan was reset to 1 year term 2 years back for around ~3.25% APR. So the rent just covers the loan payment but I have been paying insurance, home warranty & property taxes from my pocket for almost ~3+ years (that long the house is on lease). I cannot bleed anymore so I tried to work with Citi to see if I have any option. Citi came back and said I am not eligible for nothing. I tried to increase the rent and that didn't go well and my tenants plan to give me 3-4 month notice.
So am planning to initiate the short sale process. But I am worried:
1) How intense the SS process is going to be?
2) And, if Citi would agree to SS or would they the rent would cover loan so stick with it?
3) If Citi agrees to SS, how they would handle the debt cancellation?
4) Would Citi come after me for remaining debt or forgive the balance?
5) If Citi cancel the debt, what are the implications and how Citi report SS (debt cancellation) to Credit Bureaus?
6) If Citi is going to give me 1099-C, what are my tax consequences because it is not my principal residency per the law that about to expire this year?
I am really sorry for a long list of questions. But, I would like to know if anyone happened to be in my situation and how it affected their tax fillings.
I really appreciate your time and sharing your experiences and knowledge.
Regards,
-Vijay
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