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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Start by determining your basis cost Posted by Rick, The Cranky Probate Guy (CA) on September 30, 2006 at 5:50 PM In Reply to: If DIL or 4close posted by Madonna Maka on September 30, 2006 at 4:39 PM Madonna - Greg's post is right on the money. To make things simple, you need to determine how much yur basis is. That's another way of saying how much this property cost you or how much you paid, after considering down payment, loans, and rollover funds from other sources like 1031 exhanges, etc., that you're probably haven't complicated the calculation with. Most likely, your basis is the sum of the down payment plus the loan that you got. If you, for example, purcashed the property for $350,000 putting $45K of Dad's money as a down payment, plus a $305,000 mortgage (whether a frist or combination of several loans) then your basis is $350,000. If the property were to go to foreclosure sale and the bank was the only bidder (actually they'd be a credit bidder) and the property was sold for anything less than the loan amount of $305K, say $250K, then the difference of $55K would be debt relief, in otherwords, money that you owed but did not have to pay back to the lender. IRS thinks this the same as $55K of income. So, IRS would see this amount as subject to taxation, absent an agreement with Uncle Sam to offset this. If you had refinanced and took cash out later, meaning that this was not the original purchase money loan, your basis wouldn't change but the debt relief could be higher if the refi loan were greater than the original loan. There are a number of Short Sale experts lingering around this board. Did I miss anything obvious here, like mess up purchase money vs. refi loan money? Heidi? Ward? Rick Follow Ups: Re: Start by determining your basis cost Bill H 6:54 PM, 09/30/06 (5) Thanks Rick, Bill & Greg!!! 1 final question please. You Guys Rock! Re: Start by determining your basis cost Madonna Maka 11:31 PM, 09/30/06 (4) I can't afford to pay Cap Gains Tax & pay Deficiency...What is the benefit of a Short Sale? Re: Thanks Rick, Bill & Greg!!! 1 final question please. You Guys Rock! Re: Start by determining your basis cost Madonna Maka 9:55 AM, 10/01/06 (0) One final note Greg 8:19 AM, 10/01/06 (2) Oooops! Re: One final note Madonna Maka 10:04 AM, 10/01/06 (1) Short Sale Greg 7:21 PM, 10/01/06 (0) Post a Followup: Name : E-Mail : Subject : Comments: : Madonna - Greg's post is right on the money. : To make things simple, you need to determine how much yur basis is. That's another way of saying how much this property cost you or how much you paid, after considering down payment, loans, and rollover funds from other sources like 1031 exhanges, etc., that you're probably haven't complicated the calculation with. : Most likely, your basis is the sum of the down payment plus the loan that you got. If you, for example, purcashed the property for $350,000 putting $45K of Dad's money as a down payment, plus a $305,000 mortgage (whether a frist or combination of several loans) then your basis is $350,000. If the property were to go to foreclosure sale and the bank was the only bidder (actually they'd be a credit bidder) and the property was sold for anything less than the loan amount of $305K, say $250K, then the difference of $55K would be debt relief, in otherwords, money that you owed but did not have to pay back to the lender. IRS thinks this the same as $55K of income. So, IRS would see this amount as subject to taxation, absent an agreement with Uncle Sam to offset this. : If you had refinanced and took cash out later, meaning that this was not the original purchase money loan, your basis wouldn't change but the debt relief could be higher if the refi loan were greater than the original loan. : There are a number of Short Sale experts lingering around this board. Did I miss anything obvious here, like mess up purchase money vs. refi loan money? Heidi? Ward? : Rick Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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