When you lose a house to a foreclosure...?
Question:
companies report it to the IRS, how much would your taxes be?
How much is the tax on large amounts of income, like 50,000.00 for instance? assuming that they sold your home for
that much less? This situation would take place in the state of
California.
Answer:
foreclosure? tax? capital gain?...i don't know who you've been talking to but none of these things have anything to do with each other.
Let's talk foreclosure first...when you default and a NOD (notice of default) is issued...you have approx. 3 months to get out befor the mortgage company auctions off the property. NO capital Gains, No tax consequences for you 'cause you did not benefit from the sale.
and.the mortgage co cannot come after you for any short fall---so if your mortgage is $200,000 and they sell it for $150,000...you are not legally responsible for the $50,000
hope this helps---good luck
You REALLY need to slow down, think your question through, and rephrase it. It sounds to me as if you LOST money on the foreclosed sale of your home. In such a case, there is no additional tax liability. In fact, it is my understanding that you still owe that money to the lender!
So, what's your talk of $50,000? I just don't follow. Sorry.
Catsandy is incorrect. If your lender does notify the IRS then you do have tax consequences. Your best bet right now is to find a CPA, consult with a professional that does know all the laws and how to begin to prepare yourself now for tax time. This is true because I had a client who had to let two houses go and his CPA told him that there are tax consequences.
Good luck
CA Lender
If the house was foreclosed, and it sold for sheriff sale for $50,000 less that what you owed on it, then you don't have to pay taxes on that. You lost money, and you don't pay taxes on money that you never got.
Now, if you are talking about a short sale, and the bank took $50,000 less that what you owed, in order to help you sell the house, then there will be a tax liability. In this instance, the bank forgives the $50,000, and this is treated as regular income.
So whatever your tax rate is for 2007, another $50,000 will be taxed at that rate. But your tax rate depends on how much money you make, so consult the IRS website for the actual marginal tax rates. At low incomes, you may pay only 10%, but higher incomes can be over 30%. The extra $50,000 from the short sale could be taxed at lower rates or higher rates, depending on how much other income you have.
But again, any tax liability is only present if you had done a short sale and the bank had forgiven the extra $50,000. If the house sold at sheriff sale for $50,000 less that what you owed, then there's no income. The property was just foreclosed and sold.
Hope that helps.
ForeclosureFish
http://www.foreclosurefish.com/...
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