Former baseball star Jose Canseco walked away from a $2.5 million home in California earlier this year, saying it "didn't make sense" to keep paying the mortgage. Not surprisingly, the bank started foreclosure proceedings.(Somebody tell Jose that Big J wants his shirt back.)
17 comments:
Please, cuz, only you and all them soft ass nickas you hang around would wear a shirt like that.
What people don't realize is that you still have to pay the taxes on the loss.
I know a dude - a partner at one of the world's biggest law firms - who us under water $700K in mortgages on two big houses. Ouch! So glad I sold that Vegas place.
I hope many more say "fuck it." J is right about taxes on the loss. Few people know that rule.
What will happen to you if you don't "pay the taxes" on the loss?
How much is the taxes on a $2.5 M loss?
I believe the rate on the loss is taxed as an ordinary loss, rather than a capital loss. This makes it much more punitive.
If you don't pay the taxes, you get a huge lien on your ass that you'll be carrying for a long while.
I believe the rate on the loss is taxed as an ordinary loss, rather than a capital loss. This makes it much more punitive.
If you don't pay the taxes, you get a huge lien on your ass that you'll be carrying for a long while.
I don't think you don't get taxed on losses, but you get taxed on debts that are forgiven, because that is considered income.
Thanks II, I was going to chime in that the portion of the debt that is forgiven is what becomes taxable.
There was an act in 2007 to waive or reduce the tax in many cases. Check out the link:
http://www.irs.gov/individuals/arti
cle/0,,id=179414,00.html
Our tax code sucks.
How is the debt "forgiven" if the bank takes back possession of the house and recovers any loss via the subsequent sale of the home.
Moreover, the foreclosee doesnt get the benefit of any recovery by the bank, meaning they are taxed for the entire remaining value of the home without credit for proceeds to the bank from the sale.
Huh...??
A forgiven debt and a foreclosed loan are two different things.
With a foregiven debt you are still in the house but don't have to pay back a loan. The IRS wants a piece of whatever you gained on the deal. Needless to say, you ain't gonna see too many of those deals in the 'hood.
With a foreclosure, your butt is out on the street. The federal government turns its back and tries to pretend that you don't exist... The state (depending where you live) might nag you for some real estate taxes, but only for the time you were in the house.
Get 'em LD!
" How is the debt "forgiven" if the bank takes back possession of the house and recovers any loss via the subsequent sale of the home."-RJE
Like this RJ. Take today's market. We are in a rapidly declining market. In fact, all lenders have labeled LA County a soft market. Most homes that are being foreclosed upon today were bought within the last 2-4 years ...at or near the peak of the market. Buyer A paid and owed 500k for his house 3 years ago, but defaulted on the loan and lost the house. Our market has changed. You live in LA. How much is the house that was worth 500k 3years ago worth today? 400 or less. Bank sells that property for 400k less sales commissions, taxes, escrow & title fees, buyer credits..and don't forget those blasted carrying costs(mortgage loss) during vacancy. Shiiiit on a 400k sale, lender may net 300-350k depending on how long it was vacant. Bringing this all around, your lender has finally sold the house which they were owed 500k for 300-350k. A pretty solid loss.
In the case of a short sale, defaulted borrowers were taxed at ordinary income rates for the difference. In the example above you gained 150-200k. You would have been taxed on that as income...until last year, as Kalena mentioned.
It is a forgiveness.
Damn. That's good shit Big Wayne.
Did you teach Big J?
DV,
I taught Big J about the world, life, business, finance, entrepreneurship, women, style, culture, game, hip hop, that scurls played out, AND I put him up on Obama. Aint that right Big J?
So, in response to your question...yeah. I taught Big J that.
Big Wayne,
You must be back on smokin the green stuff rather than the brown junk you usually tote along with you...
Just a few weeks ago, you were encouraging people to buy homes...
" You must be back on smokin the green stuff rather than the brown junk you usually tote along with you..." - bIG j
LOL. You know better Big J.
June,2008 Over 49% of homes that sold in LA county were on the market less than 30 days. Great deals exist left and right if you are among the few borrowers who can qualify for a mortgage loan.
Who taught you about entrepreneurship? And don't say Jsy Z.
That was Big Wayne
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