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You May Owe the IRS after a Foreclosure
Sunday, October 21, 2007
You may be facing foreclosure for any number of reasons: job loss, health issues, divorce, or maybe you were one of the millions of borrowers that got an adjustable-rate mortgage or ARM with a teaser rate of less than 4%. Whatever the reason, stopping foreclosure is an important step to take now.
You may be thinking of walking away from your home because you are too overwhelmed to deal with it. If you do that, you could owe the IRS. Foreclosure is treated as a sale under tax code.
According to IRS Publication 544:
“I you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. This is true even if you voluntarily return the property to the lender. You also may realize ordinary income from cancellation of debt if the loan balance is more than the fair market value of the property.”
If you need to sell your home fast you can find an expert in your local area by looking on-line. There are local home buyers that are in the business of helping people stop foreclosure. They help people just like you get out from under the debt of a mortgage that has become burdensome. After filling out an on-line sellers form, a local home buying expert contacts you. The advantage of using a service like this is that you can sell your home fast with no money out of pocket and can expect fast, professional and courteous service.