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  1. #1
    Join Date
    Mar 2008
    Posts
    16

    Default 1099 For Deed In Lieu, Tax Liability For Principal Residence?

    My question involves a foreclosure in the State of: CA

    Hello Experts,
    I submitted my paperwork and hardship letter to bank on Tuesday. Received received a call from the bank on Friday (very quick, 3 day turnaround).
    They are willing to do Deed in Lieu. They asked me to pay this year property taxes and the insurence. I told him that I can cover half of the taxes and asked them to bite the other half. He said he will get back to me on Monday with final terms. and said that the process will take 2 months.
    I feel releived..Better than letting the house into forclosure.
    Here is my question.

    He mentioned that when the bank was able to sell the house, bank will issue me 1099 for the losses incurred. What are my liabilities once the house is deeded back to the bank? Can I be covered under mortgage forgiveness act? Can some expert throw some insight into this please?
    Back ground
    -----------------
    House was bought in July 2006.
    (Will it benefit if I own and stay until I complete 2 yrs, for 1099 ans tax purpose?)
    bought for 536,000
    Refinanced last time with appraisal of 650K and bank was able to put all in 1 loan for 536,000. No second loan.
    I owe 531K now. Never pulled extra money out of the house.
    I am concerned about the 1099. The difference will be atleast 200K if they sell it. Am I liable to pay taxes on those 200K income in the future? Can I be covered under mortgage forgiveness Act? Please Advise?

  2. #2
    Join Date
    Feb 2008
    Location
    Austin, TX
    Posts
    48

    Default Re: 1099 For Deed In Lieu, Tax Liability For Principal Residence?

    I doubt you'd be covered by the act unless you can prove that you were a victim of predatory lending. I'd check with an attorney though just to be sure.

    In answer to your question about the 1099, yes, you will be held responsible to pay income taxes on the amount that the 1099 is issued for. It will be considered taxable income for you for the year it's issued. Just be glad that they're not pursuing a deficiency judgement against you. That'd be far worse.

  3. #3
    Join Date
    Apr 2008
    Location
    Calabasas, Ca
    Posts
    52

    Default Re: 1099 For Deed In Lieu, Tax Liability For Principal Residence?

    As the previous poster noted that it is most likely that you will not qualify for assistance. I don't know what the mentioning of predatory lending has to with the law as it pertains to the difference in the debt between what is owed to the bank and what the home is actually sold/refinanced for.

    As for contacting legal advise this is ALSO incorrect. Please contact a CPA. An attourney is not (under most cases) not going to give you tax advise . (please excuse my expression but this is how we feel when we hear these types of things.

    If you get to the point of a 1099 it is too late. If you get to the point of agreeing to take a 1099 in the future, then it's too late. We have negotiated many times for our clients a full release of lien where they did not end up owing any money at all. Happy negotiations.

    Regards.

  4. #4
    Join Date
    Mar 2008
    Posts
    16

    Default Re: 1099 For Deed In Lieu, Tax Liability For Principal Residence?

    Quote Quoting jkatz
    View Post
    As the previous poster noted that it is most likely that you will not qualify for assistance. I don't know what the mentioning of predatory lending has to with the law as it pertains to the difference in the debt between what is owed to the bank and what the home is actually sold/refinanced for.

    As for contacting legal advise this is ALSO incorrect. Please contact a CPA. An attourney is not (under most cases) not going to give you tax advise . (please excuse my expression but this is how we feel when we hear these types of things.

    If you get to the point of a 1099 it is too late. If you get to the point of agreeing to take a 1099 in the future, then it's too late. We have negotiated many times for our clients a full release of lien where they did not end up owing any money at all. Happy negotiations.

    Regards.
    Katz,
    Have you negotiated the terms for a Deed In Lieu for not issueing 1099?
    If so, I would like to talk to you in taking your help. Need to know how the thing works with you and how you charge. email me at kingno1@hotmail.com and we will talk.
    Thanks,

  5. #5
    Join Date
    Apr 2008
    Location
    Calabasas, Ca
    Posts
    52

    Default Re: 1099 For Deed In Lieu, Tax Liability For Principal Residence?

    Mr King01,
    Thank you for your interest in our services. We are merely looking to attempt to advise you of the possibility of the options that may be available to you. As we DO negotiate with lenders we would be interested in speaking further with you about your situation before we can say that we can be of assistance. Feel free to reach us at the number below. We as well will send correspondence to the e-mail noted above.

    Regards,

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