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Old 05-10-2010, 08:20 AM
 
Location: Lady Lake, Fl USA
111 posts, read 221,973 times
Reputation: 60

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IS THIS TRUE?
- The deadline to qualify for the $8,000 Tax Credit was April 30th 2010. (i.e an executed CONTRACT-FOR-SALE by that date).
- The deadline to CLOSE that sale is June 30th 2010.
- If the Short Sale closing documents are not completed in time by the Owner/Sellers Lender(s), then the Tax Credit will no longer be availabe to the Buyer?
IF THAT'S TRUE - Is this a viable technique to accomplsih both (Qualify for the Tax Credit AND be able to wait on the Short sale Closing)?
-) On or before June 30th 2010, Owner/Seller to 'sell' the subject property to the Buyer with a "Quit Claim" deed 'SUBJECT TO' the Liens of Record? (i.e. The existing mortgages).
Would the result now be that -
1) The 'Buyer' now owns the subject property and therefore qualifies for the Tax Exemption?
2) This procedure will not impede or interfere with the ongoing Short Sale process?
+Please don't say "Go see an attorney" - The three I've talked to know less about Short Sales than I do, and have no clue . . . .
Thanks for your help . . . .
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Old 05-10-2010, 08:26 AM
 
Location: Tempe, Arizona
4,511 posts, read 11,862,318 times
Reputation: 2193
Yes, it's true that the short sale must close by June 30th.

You may also check with the IRS, but I doubt your suggestion will work. IRS requires a settlement statement (usually a HUD-1) as part of the documentation package. The instructions include the word "purchase", not transfer of title. The credit is meant to offset the cost of purchase.

http://www.irs.gov/pub/irs-pdf/i5405.pdf
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Old 05-10-2010, 08:38 AM
 
Location: NJ
17,579 posts, read 39,551,416 times
Reputation: 16129
Forget the attorney. Talk to an accountant familiar with these things.

But IMHO it hardly seems possible this will work and be legit.

EDIT: Or give the IRS a call.
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Old 05-10-2010, 09:47 AM
 
Location: Lady Lake, Fl USA
111 posts, read 221,973 times
Reputation: 60
Default Short Sale/Tax Credit

[quote=rjrcm;14111329]Yes, it's true that the short sale must close by June 30th.

You may also check with the IRS, but I doubt your suggestion will work. IRS requires a settlement statement (usually a HUD-1) as part of the documentation package. The instructions include the word "purchase", not transfer of title. The credit is meant to offset the cost of purchase.
http://www.irs.gov/pub/irs-pdf/i5405.pdf[/quote]

-) In Florida, a Quit Claim Deed can be used for a Sale/Purchase (as can several other kinds of Deed Formats.So it would be a legitimate Sale & Purchase WITh a HUD-!.
-) As I'm sure you know, most deeds say something like, "For $10 and other valuable considerations..."
So, I'm hoping . . . . .
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Old 05-10-2010, 09:55 AM
 
Location: Lady Lake, Fl USA
111 posts, read 221,973 times
Reputation: 60
Default Imitate never innovate . .

Quote:
Originally Posted by manderly6 View Post
Forget the attorney. Talk to an accountant familiar with these things. But IMHO it hardly seems possible this will work and be legit. EDIT: Or give the IRS a call.
-) I don't think I'm smart enough to come up with an idea that new or unique.
-) The problem with 'innovation' is that there is no-one to talk to . . .
-) I had assumed that someone has already thought of this strategy and could show me why it is, or is not, viable.
-) So far we have agreed that it must be a sale - WHICH IT IS . .
-) The IRS has not responded yet.
-) The CPA agrees that she doesn't THINK it would work, but can't, specifically, say why not.
So, I'm still looking and hoping . . . . .
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Old 05-10-2010, 09:58 AM
 
Location: Tempe, Arizona
4,511 posts, read 11,862,318 times
Reputation: 2193
You are also assuming the short sale will be approved and eventually go to closing. Does the buyer really want to be stuck with a deed for a property facing foreclosure?

I still don't think your plan will fly, but as recommended, check with a tax professional and the IRS.
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Old 05-10-2010, 10:00 AM
 
Location: San Diego
2,888 posts, read 6,409,558 times
Reputation: 2004
You are required to do your tax return via mail if you plan to get the credit. You will need to fill out form 5450 and attach a copy of your purchase agreement. They will slowly go over your return. It took them 2.5 months to inform me my form 5450 was too hard to read. Last week makes 3 months since I mailed my return and I'm still waiting for my return. I'm hoping for Mid-June. They are going over the tax credit with a slow fine pen to "prevent" fraud...more like delay my rightful credit.
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Old 05-10-2010, 10:33 AM
 
Location: Lady Lake, Fl USA
111 posts, read 221,973 times
Reputation: 60
Default The risk of foreclosure . .

Quote:
Originally Posted by rjrcm View Post
You are also assuming the short sale will be approved and eventually go to closing. Does the buyer really want to be stuck with a deed for a property facing foreclosure? I still don't think your plan will fly, but as recommended, check with a tax professional and the IRS.


RJRCM - Good point - if the Short Sale doesn't work out for whatever reason, the property would then go into Foreclosure with him 'in possession'.
Q - How much of a risk is it for him to buy from the Lender after that foreclosure) I guess that price could be even less than the short sale price - right? . . . .
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Old 05-10-2010, 10:42 AM
 
Location: Lady Lake, Fl USA
111 posts, read 221,973 times
Reputation: 60
Default Short sale fraud . . .

Quote:
Originally Posted by Dub D View Post
You are required to do your tax return via mail if you plan to get the credit. You will need to fill out form 5450 and attach a copy of your purchase agreement. They will slowly go over your return. It took them 2.5 months to inform me my form 5450 was too hard to read. Last week makes 3 months since I mailed my return and I'm still waiting for my return. I'm hoping for Mid-June. They are going over the tax credit with a slow fine pen to "prevent" fraud...more like delay my rightful credit.
DUB D - Yeah - I saw this notice -
[LEFT]Home Affordable Foreclosure Alternatives, the federal program initiated on April 5, bans house flipping within 90 days of the closing of the short sale.
“My staff puts a lot of focus on making sure [the short sale] is an arm’s-length transaction,” said Jon Meade, Fifth Third Bank’s vice president of loss mitigation. “We’re not looking to take a short sale so your brother can buy it and ultimately give it back to you.”[/LEFT]
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Old 05-10-2010, 11:31 AM
 
Location: WNY
1,049 posts, read 3,475,329 times
Reputation: 267
What op posted on dates is correct for the timeline.

Definately talk with an accountant.

Based on first impression I would think any deal that does not close by June 30th will not qualify.

I leave the short sales to the experts, I HATE THEM. Why? Because the only person the buyers end up hating is the agent. Once we do our work, we can only wait for the banks - which can and have taken up to 8/9 months in some cases.
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