QUESTION
Short sale, deed in lieu of forclosure, or forclosure? What is the best solution for us?
Asked on Jan 02nd, 2013 on Foreclosures - California
More details to this question:
We live in California. We were discharged from Chapter 7 last April, 2012. We did a loan modification from B of A and the offer was not something we can agree on. We are thinking of a short sale or deen in lieu of foreclosure but we heard the short sale is complicated and not benefitial to us. If we were to do a deed in lieu of foreclosure, do we have to pay tax to IRS if the lender sells our house and reports a loss to IRS even if we got discharged? Is forclosure the best option since we already got discharged from BK and the credit is ruined?Will appreciate your response.
2 ANSWERS
*Regarding the tax implications*: it depends on whether the loan was purchase money or not; if yes, you don't recognize income for the short sale; otherwise, you do. *Regarding letting the property go to sale*: Yes, your credit was marred by the bankruptcy filing, but having a foreclosure on your record will be far more damaging to it; you should try to avoid a foreclosure at all costs. *
Answered on Jan 04th, 2013 at 2:45 PM
A short sale is the way to go. I handle this all of the time. A deed in lieu presents other problems. A bank will only do one if there are no other liens of any type on the property and it reads the same as a foreclosure on your credit reports.
Answered on Jan 04th, 2013 at 5:37 AM