Legal Question in Real Estate Law in California

Re: California losing 2nd home need info

The condo can no longer be considered your primary residence as you have left the state, no longer reside in it, and had a tenant renting it, even if only for a very short period of time. As such, when the condo is foreclosed, yes, your credit will be adversely affected. Second, you have a potential income tax issue in that the foreclosure will be treated as a sale at the combined value of all liens on the property. If that lien value exceeds your tax basis in the property, you will have a taxable gain. This is an issue you really need to discuss with your accountant or a tax attorney for definitive advice. We are not tax counsel and cannot provide this type of advice. Additionally, if there is a second on the property, and the first forecloses, you may have exposure for a "sold-out-second" or the entire amount of that second loan becomes a personal, unsecured debt you now owe.

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