Lost your home? You may owe IRS

Even if you received no money from a foreclosure sale, you may have to pay capital-gains taxes on the phantom income. And that's not all...

Even if you received no money from a foreclosure sale, you may have to pay capital-gains taxes on the phantom income. And that's not all.By Kay Bell, Bankrate.com
More from Bankrate.com
If you thought a foreclosure ended the financial miseries associated with your former home, think again. You soon could be hearing from the IRS about taxes due in connection with the residence you no longer own.
"You can walk away from the big house payment, but not from the potential tax implications," says John W. Roth, senior tax analyst at CCH in Riverwoods, Ill. "And if you couldn't afford the mortgage, you probably can't afford the taxes."
As the lending crisis continues to shake out, more homeowners, particularly those who used creative mortgages to buy their houses, could be in this predicament. Even longtime homeowners who refinanced their properties based on increased value when the real-estate market was hot could find themselves in tax trouble if they lose their properties to the bank.
Forgiven but not forgotten.
Read more of this article at http://realestate.msn.com/selling/Article_bankrate.aspx?cp-documentid=5427263

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