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What? It's not tax evasion until you owe the tax and don't pay. You don't owe the tax until you get a 1099. And sometimes they don't issue a 1099, which means you owe no tax. And in some cases, per the Mortgage Debt Relief Act, it's still not taxable. Since I bought this as a primary and converted it to a rental, whether I'm covered by the Mort. Debt Relief Act is a grey area. Tax evasion doesn't even enter into this.
So avoiding a 1099 isn't evasion?
Okay, go ahead and ask a financial institution to not give you a 1099.
Also, just because you weren't issued a 1099 doesn't mean you don't owe the tax. You are confused. A 1099 is a reporting instrument and has nothing to do with liability of taxes for income if the income is taxable.
Tax evasion enters into it when you ask someone not to report your income. But what the heck, go for it, I'm sure the IRS will see it your way.
This is what is wrong, people make personal decisions and then want someone else to suck up the mess they created.
This whole thread was about a choice and then wanting to get out of the consequences of that choice. The next time someone has a beef with the system, the economy or the housing market, all they need to do is read this thread and you'll know first hand why things are the way they are.
It isn't that some can't afford to pay, they just don't want to. Just spread around the problem to everyone else.
Used to be, people would be ashamed, not anymore. Now they sit back and figure out ways to dump on society.
How would any deficiency be spread to anyone but the bank that agreed to it? (BTW, they didn't take a bailout.) I didn't make a decision to have my home value plummet, I didn't make a decision to move my job to AZ after that happened and I didn't make a decision for the rental market to command $500 a month less than my carrying costs. I'm not blaming anyone else for my problems. But as long as short sales are legal and viable, people will continue to do them. I don't think I will do one now, as I've found a better option that leaves my credit intact, with no deficiency and no 1099. Now the issue is getting my tenant to play along, who probably won't like the idea of realtors showing the property.
I bought my current house in AZ as a short sale and it took almost a year. So I'm familiar with the process, but not how it works for short selling a rental property originally bought as a primary.
IMHO I would say your chances are not very good at all probably really close to zilch considering you got the means to pay back the mooola to the bank they will want to collect.
Op, Owning a rental property had risks attached, that you failed to take into consideration. Had the market behaved in the way you would have liked, you would have been rewarded.
Uh no, I was fully aware of the risks of renting the place out, but had to do it because I had to move and couldn't sell it at that time. Fridge died today. That was another $325 to repair. I'm down $1000 for Feb. so far.
Anyway, sort of curious now about the tax consequences of selling for a $53k loss between what I paid and what it would probably go for now. If I've been taking the depreciation off on my taxes since it converted to a rental, does that get backed out of my capital loss or how is my basis then calculated?
Uh no, I was fully aware of the risks of renting the place out, but had to do it because I had to move and couldn't sell it at that time. Fridge died today. That was another $325 to repair. I'm down $1000 for Feb. so far.
Anyway, sort of curious now about the tax consequences of selling for a $53k loss between what I paid and what it would probably go for now. If I've been taking the depreciation off on my taxes since it converted to a rental, does that get backed out of my capital loss or how is my basis then calculated?
Look man. I told you can sell it for a loss. Recapture all of your allowed losses. Plus add realtor/closing costs to your overall losses.
You may get $50-75k tax write off when selling the property and get a huge tax brack.
This will offset what you need to eventually pay off the second lien.
Yes you will have to re add whatever u depreciated. But you overall loss will still be huge.
I wrote off the entire 137k loss of my primary home converted to rental property realizing a $40k tax benefit and reduced my overal tax liability to about 8% for the year I took the loss. I also had disallowed rental losses cause my AGI was over 150k. Those got re added to my overall losses.
Now go negotiate a better term with the second lien holder before you dump the property.
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