Tax Implications - Loan Modification Forum

Ram-RN · 07-03-2009, 10:23 AM

Hello,

I spoke with a real estate attorney and just wanted to get a second opinion. Here's my situation.

In Sept. 05 I took out an equity loan from my primary house for 100k to purchase a rental for 500k in the bay area. About a year later, I refinanced the rental to take back the 100k I took from my primary. I refinanced the rental into a single neg am loan. I owe approx 580k now and the house is probably worth 250k max. I have a passive loss of 100k so far. My question is whether I will be responsible for any taxes if I short sale or foreclose the property. Will I lose the passive loss that I have accumulated? I am trying to review all my options at this time.
The attorney I talked to said that the worse case scenario for me would be to damage my credit. He also said that the passive loss would cancel out the gains. Is this true? Thanks in advance for the answers.

Moe Bedard · 07-03-2009, 12:26 PM

Just wanted to let you know that the lawyers may be out today and tomorrow. They might be in here later, but no guarantees. Just FYI

Paul Molinaro Esq. · 07-03-2009, 03:38 PM

NO LEGAL ADVICE HERE - JUST GENERAL INFORMATION - ANY SIMILARITIES TO ANYONE'S ACTUAL SITUATION IS JUST ONE HECK OF A COINCIDENCE.

I'm not a tax lawyer... and while this question seems like it should be an easy question to answer, it is not. This is one for a CPA or tax attorney... the whole tax picture needs to be considered, not just the property.

- Paul

07-03-2009, 10:23 AM	#1 (permalink)
Ram-RN Junior Member Join Date: Jul 2009 Posts: 2 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Tax Implications Hello, I spoke with a real estate attorney and just wanted to get a second opinion. Here's my situation. In Sept. 05 I took out an equity loan from my primary house for 100k to purchase a rental for 500k in the bay area. About a year later, I refinanced the rental to take back the 100k I took from my primary. I refinanced the rental into a single neg am loan. I owe approx 580k now and the house is probably worth 250k max. I have a passive loss of 100k so far. My question is whether I will be responsible for any taxes if I short sale or foreclose the property. Will I lose the passive loss that I have accumulated? I am trying to review all my options at this time. The attorney I talked to said that the worse case scenario for me would be to damage my credit. He also said that the passive loss would cancel out the gains. Is this true? Thanks in advance for the answers.

07-03-2009, 12:26 PM	#2 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,931 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Tax Implications Just wanted to let you know that the lawyers may be out today and tomorrow. They might be in here later, but no guarantees. Just FYI __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

07-03-2009, 03:38 PM	#3 (permalink)
Paul Molinaro Esq. Attorney Join Date: Mar 2009 Location: 980 Montecito Drive, Suite 206, Corona, CA 92879 Posts: 133 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Tax Implications NO LEGAL ADVICE HERE - JUST GENERAL INFORMATION - ANY SIMILARITIES TO ANYONE'S ACTUAL SITUATION IS JUST ONE HECK OF A COINCIDENCE. I'm not a tax lawyer... and while this question seems like it should be an easy question to answer, it is not. This is one for a CPA or tax attorney... the whole tax picture needs to be considered, not just the property. - Paul __________________ ______________________________ Paul J. Molinaro, M.D., J.D. Attorney at Law, Physician, Broker ______________________________ Fransen & Molinaro, LLP 980 Montecito Drive, Suite 206 Corona, CA 92879 pmolinaro@LoanLaw.net 1-888-756-2652 ______________________________ The information contained in this post is NOT to be taken as legal advice. My posts are for general information and educational purposes only. If you need legal advice, please contact an attorney.

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