Facing Foreclosure? What you should know.

I want to MAKE IT VERY CLEAR that I am NOT a CPA or Real Estate Tax Attorney.  However, my father is a CPA (formerly on many of our radio shows and speaking engagements) and my brother works in that line of work as well.  I ALWAYS say please consult with your own CPA and  there are some of them who are giving out incorrect info (confirmed from my father from Solomon, Ross, Grey and Company – specializing in Real Estate).

When is it ok to walk away from your home?   Whether it is a primary, vacation, or investment property, you need to know how to protect yourself from the lender coming after you personally for any forgiveness of debt or the IRS coming after you for any potential tax consequences from a short sale or foreclosure, understanding insolvency & how you can avoid any federal or state taxes, understanding BK & Foreclosure laws, and how to use this info when negotiating with the bank (if you are going thru that process).

When considering what you should do if you don’t qualify for a loan modification, you have to be aware of potential tax consequences of a short sale, legal ramifications (i.e. signing a promissory note where these lenders may have the right to come after you to collect), & know when it is a good time or not to walk away from a home that you own.

Before you list your home for sale, you need to be aware of these 3 articles.  If you or someone you know is going through this, please print out these articles and read them.  If you have any questions after reading these 3 articles, talk to a CPA who understands Real Estate.  We are not allowed to give out Tax or Legal advice, but I can certainly tell you what I would do if I was in your situation.  In fact, my father is a CPA and my brother also happens to work with him.  There are a lot of things that need to be considered.  Please consult with your own CPA or Attorney.

Here are those 3 articles.  If you would like to talk to us about listing a property for sale & you owe more than what it is worth, do yourself a favor and check out these articles and then give us a call.

Tax Consequences of a Short Sale or Foreclosure – need some advice?http://www.signonsandiego.com/news/2010/mar/03/hefty-tax-bill-may-hit-those-who-lost-home/

California won’t tax forgiven home debt – http://www.sacbee.com/2010/04/09/2666095/california-wont-tax-forgiven-home.html

Another good article to advise your friends of when it is ok to walk away from their home – http://online.wsj.com/article/SB10001424052748703795004575087843144657512.html?mod=djemRealEstate_h

However, if you are insolvent, that will eliminate any tax consequences (please consult with your CPA).  Please do not sign Promissory Notes in your Short Sale package.  If you see one in the Short Sale package, don’t sign it, crumple it up & use it as practice for your basketball shooting skills.  The lenders don’t catch it a majority of the time.  By signing the promissory note, you are authorizing the bank to come after you for your assets (possibly record a lien on any new real estate you purchase down the road).  It is not good. YOU HAVE BEEN WARNED!

Homeowners facing Foreclosure or Short Sale, Realtors who want to help protect homeowners from the lenders coming after them for the Forgiveness of Debt (down the road) & possible potential law suits for the Realtors for NOT notifying the homeowner that the lender may do that.

My next workshop is Saturday, November 13 · 10:00am – 1:00pm

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About fredsolomon
FRED SOLOMON has been speaking to audiences for over 20 years helping people improve their financial decisions, real estate strategies and overall lives.. Many ordinary people have learned from Fred’s strategies and success tips. Fred Solomon is a motivational speaker, spokesperson and financial coach on real estate and mortgage trends, how to make money in this economy, helping others or profiting in foreclosures and short sales. Fred Solomon is featured on the investment radio talk show, “The Solomon Free Money Hour” which has aired for over three and a half years of broadcasts on CBS Radio stations and Angels AM 830 News Radio. His fun, upbeat, positive and educational radio talk show also streams live anywhere in the world (www.am830.net). Fred offers in-depth knowledge on finance and real estate investors, realtors, CPA’s and anyone interested in learning proper home loan and real estate strategies and trends. Fred grew up in the San Fernando Valley, graduated from San Diego State in 1990 with a BS in Finance and emphasis in Real Estate and immediately became a broker at the age of 22. Fred has been a licensed CA Dept of Real Estate Broker for 19 years. His experience includes residential 1031 exchanges, commercial real estate, multi-family apartments, representing buyers and sellers for the first time investor to the seasoned investor. Fred and his wife and co-founder, Lisa Solomon are co-hosts of The Solomon FREE Money Hour Mortgage Talk Radio.

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