I'm really concerned about the people who have short sales and pre-foreclosures that will end up with a tax bill from the IRS after the property has sold. I think this is a double whammy for the people in trouble. If no one helps these people, I don't know how they'll be able to recover if we don't see positive signs of more better paying jobs.
Your thoughts.
I think the bad options for the borrower are simply to be measured by degree -- which is worse depends on the situation of the borrower. It may be advantageous to have a termed work out of the short fall rather than the short term tax hit. Or if the borrower was active enough in the market to be defined as a real estate investor as primary income source, then the 1099 income ordinary income could be offset by recasting the loss of value as an ordinary loss (instead of a passive loss that cannot be applied to ordinary income gains). Or maybe a walk away foreclosure is just the only way to go. Like I said - it all depends.......
Richard P. Zaretsky, Esq.; rpz99@florida-counsel.com West Palm Beach, Florida
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