So, you’re about to lose your home to foreclosure.

You talk with your lender, and it agrees to let you sell it, instead.

Because of market conditions in your neighborhood, you end up selling it for less than you owe to the lender.

But, you’re lender says, that’s okay.

So, you’re in the clear, right?

No.

For example, say you owe the lender $400,000, but you’re only able to sell your home for $350,000. You give the proceeds to your lender and it says, “You’re all set, you don’t have to pay us the rest … but, get lost.”

Trouble is, the Internal Revenue Service doesn’t like that.

To them, the $50,000 debt forgiven by the lender is basically “taxable income”.

So, you’ll owe taxes on that $50,000.

What do you think of that?

Over the past couple of months, some members of Congress have suggested changing the tax law so that people in this situation end up not owing any tax. The idea being that it only adds insult to injury. More and more homeowners are entering into foreclosure, and we need to get them back on their feet, not hit them while they are down.

Congress has estimated that the IRS would collect up to $2 billion in income taxes, over the next ten years, under current tax law.

There’s more to this, however. It’s not as if everybody who loses their home encounters this situation.

If someone loses his or her home and is basically penniless, then their loan debt is “forgiven” and they don’t owe the IRS anything (consult your tax adviser …).

The tax law, as I understand it, only requires tax payment from those who are otherwise financially solvent. Basically, I guess, someone who can’t afford to keep paying his or her mortgage loan, but has money to pay rent, etc.

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Updated:  1st Q 2018

Author Profile

John Ford
John Ford
EXPERIENCE

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs



In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.



HISTORY

For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.

AREAS COVERED

Back Bay

Beacon Hill

Charles River Park

Downtown/Midtown

North End

South End

Seaport District

South Boston

Waterfront

Brookline

Surrounding Communities of Boston
Contact
John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.




John Ford
Ford Realty Inc
137 Charles Street
Boston, Ma 02114

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