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asked 5 months ago
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Kind of a problem. First, if the bank does it, a couple of things could happen. If you owe more money than the property is worth they can still chase you for any amount above the value of the home up to the amount you owe. For instance if you owe $100k and the house is worth $150k there's $50k they may still try to collect. If we assume that, in writing, they agree to accept the deed as payment in full (so no deficiency for them to collect) then you're good there except you're going to get a 1099C from them next January. Assuming the same numbers as above you now have $50k of "income" that the IRS is going to collect tax on. If it was your primary residence then that tax would be waived (currently) but since you said "investment property" there's no such waiver.
Bottom line? You need to see a tax attorney or real estate attorney in the state the property is located in. There's plenty of "ins" and "outs" to this. Some states don't allow deficiency judgements but the rules vary.
Hope this helps.
Bottom line? You need to see a tax attorney or real estate attorney in the state the property is located in. There's plenty of "ins" and "outs" to this. Some states don't allow deficiency judgements but the rules vary.
Hope this helps.
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