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Monday, July 15, 2013
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Real Estate Investing: Things to Consider When Buying on a Short Sell
As a reaction to the economic and real estate crisis, more and more people consider short selling their properties to protect their credit ratings. The humiliating choice between short selling and being foreclosed will drive the home owner to an emergency sale. These are the unfortunate time when real estate investing can come into play as there are now opportunities to buy prime properties for a fraction of their actual price.
There is a drawback to this type of investing however. To protect the investment, get some legal advice from a knowledgeable and experienced real estate lawyer and call a competent accountant to discuss what ramifications can be faced on short sale taxes.
It is important to note that not all lenders would readily agree to a short sale and they would prefer foreclosures. However, there are too many properties now foreclosed and there are not a lot of buyers so there might be a chance that they would agree.
There is the existence of the Mortgage Forgiveness Debt Relief Act of 2007 wherein the IRS can judge that the forgiveness is actually an income on the part of the property owner and they are within their rights to tax that. There is also the fact that lenders may just run after the property owner of the balance of the money owed and paid. There are some states which can label this as a deficiency. The best thing to do would be to hire a lawyer and talk about this thoroughly.
Briefly, short selling a property does not necessarily mean that the remaining balance of the loan will not be paid. As an investor, it is best to investigate these special considerations before jumping the gun and paying for an unstable property. With potential problems the property may end up being more trouble rather than an investment.
There is a drawback to this type of investing however. To protect the investment, get some legal advice from a knowledgeable and experienced real estate lawyer and call a competent accountant to discuss what ramifications can be faced on short sale taxes.
It is important to note that not all lenders would readily agree to a short sale and they would prefer foreclosures. However, there are too many properties now foreclosed and there are not a lot of buyers so there might be a chance that they would agree.
There is the existence of the Mortgage Forgiveness Debt Relief Act of 2007 wherein the IRS can judge that the forgiveness is actually an income on the part of the property owner and they are within their rights to tax that. There is also the fact that lenders may just run after the property owner of the balance of the money owed and paid. There are some states which can label this as a deficiency. The best thing to do would be to hire a lawyer and talk about this thoroughly.
Briefly, short selling a property does not necessarily mean that the remaining balance of the loan will not be paid. As an investor, it is best to investigate these special considerations before jumping the gun and paying for an unstable property. With potential problems the property may end up being more trouble rather than an investment.
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