Tax Concern of Non-Payment of Mortgage
My question involves a mortgage in the state of: California
I am a co-owner of my mother's house. There are 2 mortgages on this property. 1st is for $300,000 & the 2nd for $45,000. I was living with my mother & father (who is now deceased), at the time we were able to afford the house. Since my father passed away and I became unemployed, my mother has been struggling with her only source of income, social security & pension. I am living pay check to pay check with UI. I have since then moved out and am now living with my fiance and our 6yr. old daughter. My mother can no longer afford both mortgages & has decided on short-sale. We thought we could depend on our agent to handle the process but unfortunately is having difficulty in getting the 2nd mortgage to cooperate with the short-sale process. We were told that the house is now in foreclosure. How will this whole non-payment of mortgage effect me as the co-owner tax wise?
Also, My fiance & I have put our wedding plans on hold because he's concern about our financial future. Instead of supporting my family, I'll be too busy paying back what I could possibly owe. Any advice would be greatly appreciated.
Re: Tax Concern of Non-Payment of Mortgage
The IRS explains post-foreclosure tax liability here. The Mortgage Forgiveness Debt Relief Act, discussed therein, has been extended through the end of 2012, and will probably prevent you from having tax liablity if a foreclosure occurs during the current calendar year.
Re: Tax Concern of Non-Payment of Mortgage
Possibly owe? You do owe the money. They have not been able to collect it yet. Bills do not disappear because they don't fit your current lifestyle.