Short sale vs foreclosure?
Question:
here is my scenario right now)
shortsale: the buyer is offering less than what the lenders want. now, lender counter offered '410k or else.'. my realtors are thinking to pitch in his commission to make up the difference, and asked me to pitch in too. that's gonna be a lot for me. now, i am behind on pymt and i believe lender temporarily 'froze' my accts (for now). i wonder if any forgiven debts will be charged to irs tax, and if there is a way for me to get out of it. i got 2 homes this year for 'short sale'. fyi-
now, someone told me to just foreclose and let lenders have them. im sure credit will be screwed up anyways.
what are the costs and will bankruptcy the better option to get out of this disaster?
i had enough about owning homes.
Answer:
A shortsale is generally less damaging than a full foreclosure or bancruptcy. However, having several short sales is going to be about the same or worse than a single foreclosure of bankruptcy.
As far as the IRS, yes, one huge problem with any of this is any default, short saleforeclosure or debts discharged in bankruptcy are considered income according to IRS rules. Thus, if you have $500,000 of loans on properties, and they all are foreclosed on or discharged by bankruptcy, the IRS considers that you received income of $500,000 and you are responsible for income taxes. You can often negotiate that down to a lower level, but it is an ugly process.
So from that stand point alone, doing a short sale is much better.
I wish you luck
Add this into your scenario.
If you are able to complete a short sale, then your responsibility to the lender will be over. Your debt will be satisfied. You will never need to deal with them again.
If the lender forecloses, and the foreclosure sale does not generate enough cash to satisfy your outstanding mortgage balance, then the lender can sue you for the difference. (Unless you are in one of the few states that do not allow "deficiency judgements.") That means that you could still be paying off your debt to the lender long after the foreclosure occurs.
And, yes, you will be required to pay taxes on the "forgiven" portion of the debt. The lender will issue a 1099, so it will be documented.
you always want to save the home, if you go through a fore closer your credit will be marked for 8 - 10 years.
Look at this! This may help!
Mark
http://marksaveshomes.com
I think you should search for and read the question about foreclosure and plasma tvs that was just posted. Check out my answer. Everyone wants to be an investor and they think they are just so smart. I sure hope the govt doesn't do anything to help bail you people out. I don't feel sorry for you. Everyone trying to make quick easy money. Not that easy is it?
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