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About Dennis Herman
Expertise
I can answer questions on Real Estate such as question on writing an Offer to Purchase. What can go wrong after an offer is written? What is Buyer Agency and what will it do for me? What is a foreclosure? What is the difference between a foreclosure, a bank owned property and a short sale? What is the best way to locate a property? What steps can be taken to avoid foreclosure? How do Real Estate Agents get paid? How can I quickly build equity in a home? How do I view homes? What types of homes will have the best prices? How do I choose an agent? What types of financing are available?

Experience
Residential and commercial real estate. New home purchases. Buyer Agency. First time home buyers. Foreclosures, bank owned properties, estate sales and short sales.

Organizations
Greater Milwaukee Realtors Association Wisconsin Realtors Association National Association of Realtors

Publications
http://activerain.com/bloghome

Education/Credentials
State of Wisconsin Licensed Real Estate Sales Agent Accredited Buyer Agency Training Relocation Training Certified Senior Citizen Representative Wisconsin Real Estate Continuing Education

You are here: Experts > Real Estate > Foreclosure > Foreclosure > foreclosure/short sale

Foreclosure - foreclosure/short sale

Expert: Dennis Herman - 10/23/2009

Question
I have a house that is considered investment property because I don't live there. I had renters for a few years, but now it needs repairs and since I don't have the money to do them, I cannot rent the property. I stopped making payments on the house five months ago and the bank wants to foreclose. I have a $40,000 first mortgage and a 100 thousand dollar home equity payment on the house. The house's value has gone down to about 85 thousand dollars. I would like to keep the property, but so far the bank doesn't seem to want to do anything about lowering what I owe. I have a real estate agent who is trying to do a short sale on my house and sell it for 50 thousand dollars. I don't see why if the bank would supposedly accept such an offer, they wouldn't make me the same offer and I would keep my house. Is there anything I can do?
Also, if I do agree to a short sale, do I have to pay taxes on the amount the house sells for (I bought the house for 30 thousand dollars about thirty years ago and have not lived in it for almost three years). Someone told me that I would have to pay taxes on all the money I owe the bank. Is that right? Thank-you so much. I live in Florida and the house is in Pompano Beach.

Answer
This site may provide some answers. http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure

Always refer to sites which end in .gov to make sure you are not dealing with people just out after your money.

There has been a time limit set up which allows people to sell on a short sale without paying taxes on what the govt considers an income. Let's look at this from the govt aspect. You never paid taxes on the loans you took out. although this was income. But when you sell, the tax man wants his money.

The new law, signed last year may only give consideration to homes, not rental properties. You can sell your home and not pay any taxes for the first $250,000 ($500,000 if married). Check the tax laws for any changes. But income property has always been taxed. I would check with an accountant before signing any sales papers. You may also want to consult an attorney.

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