Legal Question in Real Estate Law in California

I am currently trying to get approved for a short-sale. My loan was 266,000 and the property is worth 110,000 because I want to move out of the area. If I do not get approved and I forclose, other than them taking the home and my credit being ruined, are there any other legal ramifications of me owing money if I walk away?


Asked on 9/25/10, 12:16 am

1 Answer from Attorneys
George Shers Law Offices of Georges H. Shers

I assume that the entire loan was for the purchase of the house so that under the anti-deficiency statutes the sale wipes out your obligtion to the lender. However, they will probably report the transaction to the IRS, which could consider that you made a profit of $156,000, as you basically sold your $110,000 house for $266,000. For a time they were not imposinmg tha rule and you need to check with them what their current position is. Since I assume the house was your principal place of residence for at least two of the last five years, you should be able to claim the $250,000 gain exclusion and not be subject to any additional taxes.

Read more
Answered on 9/30/10, 1:47 am


Related Questions & Answers

More Real Estate and Real Property questions and answers in California