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More on Taxes and Foreclosures and Short Sales

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Mortgage Professional America | 25 Jun 2012, 11:33 AM Agree 0
The income tax consequences of foreclosure and short sales have been the subject of much interest due to the mortgage crisis. This article will provide an overview of the major Federal income tax issues. However, it is not intended to provide advice on specific situations. Rather it will help real estate and mortgage advisors become more valuable assets to their clients by better understanding when to refer borrowers for professional assistance.
  • Michael Harbert | | 25 Jun 2012, 05:05 PM Agree 0
    Mr. Matz,
    Great article and insights to the sometimes unforseen consequences for the housing crisis. How does it go, Can Win for Loosing, well that quite may be the truth. May lenders involved in short sales offered forgivness on the deed to release for the new purchaser but NOT on the NOTE. Sellers are only now, years later discovering that the debt has not done anything but grow with interest and penalties. At the closing the lender in these short sale situations could have issued a FULL Reconveyance...but that then triggers the 1099 and the CODI ! Feel sorry for the unsuspecting Principals in these deals, Principal reduction (or value appriciation) will be the future key... & the one is loaded with taxing effects.
    Thanks Again
  • William Matz | | 25 Jul 2012, 02:45 PM Agree 0
    Update: one new CA atty article comes to a different conclusion as to refi mortgages. However, the article fails to consider Federal appellate case law to the contrary, nor does it consider the effect of the Security First rule. So the balance of atty article I have seen favor the approach noted.
  • John Dzialo | | 30 Jun 2013, 09:33 PM Agree 0
    Thanks for sharing this information with us. This article contains some of the very important points about foreclosures. It will be helpful for many new foreclosure attorneys.
  • William Matz | | 02 Dec 2015, 06:17 PM Agree 0
    2015 humorous update. Another California attorney has published an article supporting non-recourse. The funny aspect is that he and the 2012 article author are partners. I maintain that the non-recourse character is the correct conclusion.
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