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swsop
05-31-2007, 03:02 PM
In recent years, many homes were bought with nothing-down or
little-down mortgages. Since then, home values have dropped in
some areas. If you are in that situation, with little or no equity
in your home, you may be tempted to walk away from the debt.

In a word, don't. Cancellation or forgiveness of debt by a lender
might generate taxable income.

Suppose, for example, you bought a home for $250,000, using a
no-down-payment mortgage loan. Say you are personally liable for
the mortgage.

Currently, the loan balance is $240,000 but the home is worth only
$200,000. If you default, the lender may cancel the debt and sell
the home for $200,000.

In this scenario, you will pick up taxable income of $40,000: the
amount by which the outstanding debt ($240,000) exceeds the property's
market value ($200,000). You likely will be much better off if you
can keep making mortgage payments, waiting for a comeback in the
housing market.

swsop

GUCHI
05-31-2007, 03:11 PM
SWSOP
interesting article, would u like to also post it in the real estate thread ???

swsop
05-31-2007, 10:49 PM
SWSOP
interesting article, would u like to also post it in the real estate thread ???

Sure Will as Spaf if he could move it for me.

Thanks:):)

swsop, moved your thread to real estate....Spaf

pyriel
06-01-2007, 04:52 AM
Good article. If individual stayed in the property for two years, then he/she shouldn't be assessed taxable income.

P

swsop
06-01-2007, 09:40 AM
Good article. If individual stayed in the property for two years, then he/she shouldn't be assessed taxable income.

P

Thanks. Coming from the Master that's great!! Have a good weekend and thanks for keeping me and others safe.:cheesy::cheesy:

Barbara (aka) SWSOP