flyer understanding how short sales forclosures are taxed corporate
UNDERSTANDING:
HOW SHORT SALES AND FORECLOSURES ARE TAXED In recent years, foreclosures, short sales, and other distress transactions have become a regular part of the real estate market.
It often comes as a surprise to Q: What are the federal income tax results of a foreclosure? many property owners facing foreclosure or a short sale A: A completed foreclosure is treated that they can be held liable the same as a sale for income tax for payment of income tax on purposes. It is reported on the taxpayer’s tax return as a sale or the foreclosure. The same is exchange in the year when the true when a property is sold foreclosure is finalized. As with in a “short sale” where the other sales, a foreclosure can lender accepts less than the result in either gain or loss. Gain full amount due. Surprise or or loss is the difference between not, two types of income can net foreclosure proceeds and the indeed result from a foreclosure borrower’s adjusted basis in the or short sale: capital gain or foreclosed property. “Basis” is loss, and relief of indebtedness usually the amount the taxpayer income. paid for the property when it The following Legal Brief discusses the income tax consequences of foreclosure and the sales in the balance due on the loan as payment in full.
Title365
5000 Birch Street, Suite 300 Newport Beach, CA 92660 [email protected]
was purposed. “Adjusted Basis” means basis, plus the cost of improvements added to the property minus depreciation. If the seller did not acquire the property by purchase, basis is calculated differently.
Q: What are the federal tax results of a short sale? A: If property is held for a purpose
other than resale or inventory, it is generally considered a “capital asset.” There is no such thing as “debt relief” loss. Gain or loss on the sale of capital assets is called capital gain or capital loss. An example of capital asset is personal residence. Gain or loss on the sale of inventory is called ordinary gain or loss. Groups of subdivision units held by a developer would be an example of property held for resale.
For more information, please consult with your tax professional.
Contact us by phone 1-877-365-9365 More information at http://www.Title365.com
HOW SHORT SALES AND FORECLOSURES ARE TAXED In recent years, foreclosures, short sales, and other distress transactions have become a regular part of the real estate market.
It often comes as a surprise to Q: What are the federal income tax results of a foreclosure? many property owners facing foreclosure or a short sale A: A completed foreclosure is treated that they can be held liable the same as a sale for income tax for payment of income tax on purposes. It is reported on the taxpayer’s tax return as a sale or the foreclosure. The same is exchange in the year when the true when a property is sold foreclosure is finalized. As with in a “short sale” where the other sales, a foreclosure can lender accepts less than the result in either gain or loss. Gain full amount due. Surprise or or loss is the difference between not, two types of income can net foreclosure proceeds and the indeed result from a foreclosure borrower’s adjusted basis in the or short sale: capital gain or foreclosed property. “Basis” is loss, and relief of indebtedness usually the amount the taxpayer income. paid for the property when it The following Legal Brief discusses the income tax consequences of foreclosure and the sales in the balance due on the loan as payment in full.
Title365
5000 Birch Street, Suite 300 Newport Beach, CA 92660 [email protected]
was purposed. “Adjusted Basis” means basis, plus the cost of improvements added to the property minus depreciation. If the seller did not acquire the property by purchase, basis is calculated differently.
Q: What are the federal tax results of a short sale? A: If property is held for a purpose
other than resale or inventory, it is generally considered a “capital asset.” There is no such thing as “debt relief” loss. Gain or loss on the sale of capital assets is called capital gain or capital loss. An example of capital asset is personal residence. Gain or loss on the sale of inventory is called ordinary gain or loss. Groups of subdivision units held by a developer would be an example of property held for resale.
For more information, please consult with your tax professional.
Contact us by phone 1-877-365-9365 More information at http://www.Title365.com
