Replies to This Discussion

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on November 13, 2011 at 10:17am

Victoria -

I had one like this with Chase and they would not allow for the FTHB grant / lien to be paid from the proceeds.  As a result they Foreclosed because of a $3,000 lien !

 

Best of luck,

Thom Colby

Newport Beach & PalmDesert

• ▶ Reply

Permalink Reply by Victoria Frieberg on November 13, 2011 at 10:20am

wow..that stinks.  i wonder if there is a contact I can speak to at Wells to see if they have a policy on it..hmmm

 

• ▶ Reply

Permalink Reply by Victoria Frieberg on November 17, 2011 at 2:00am

I found this on the irs site, but also submitted it to the taxpayor advocacy service.  I have worked with them before on other tax liability issues for buyers/sellers.  Will see how this one plays out, the negotiator seems pretty nice so far, am shooting the what if question over to her proactively today.

Exceptions to recapture – In the case of a sale of the principal residence to an unrelated person, the increase in tax due to accelerated recapture is limited to the amount of gain (if any) on such sale. For purposes of calculating gain, the adjusted basis of such residence shall be reduced by the amount of the first-time homebuyer credit allowed, to the extent not previously recaptured. In the case of an involuntary conversion, recapture is not accelerated if a new principal residence is acquired within a 2-year period. No amount is recaptured after the death of the taxpayer

  Problem with this, how would a short sale/foreclosure person acquire a new residence in 2 years, and why would that matter?  seems odd unless i am missing something!

• ▶ Reply

Permalink Reply by Victoria Frieberg on January 25, 2012 at 5:43am

Update..I had the buyer call the phone number given me by the IRS customer service person, on how to start a process to forgive or work out the money to be recaptured.  they told him he has no lien.  when going back to the irs website, it states the tax is added as an income tax, not a lien on property.  Our county shows no lien, nor state..nowhere is there a lien on property. Title work is clean.  I had him call his accountant, who told him he cannot work out with the IRS until after the sale, when there is no profit, there is no recapture.  I had seller call IRS again, and ask if they would send a letter stating that there is no tax, as that is what 3 people have told him..they will not.  i had him record employee numbers and names with every contact...clear as mud!

• ▶ Reply

Permalink Reply by Joseph Alfe on January 25, 2012 at 9:57am

Victoria, I have only run into this twice, and both times I contacted the grant company and submitted a hardship package to them and they waived the payback.

• ▶ Reply