Happy current and post Valentine's day, FF. I was in too much of a funk yesterday to say much. Hubs rescued me with a night at a pub near the Hauptbahnhof and assistance with the chores when we got home. Hence, the smile on my face, this morning. Oh, and did I tell you I love you all! :D
How does it make ANY SENSE that when you do a short sale that you get taxed for the amount of your mortgage that is above the sale price of the house?
In what sick world is a LOSS of monetary value considered to be an EFFING GAIN?
Our tax code is deliberately effed up to help the few and not the many imho.
- Mathew A. Koeneker
Alex, can't you claim the loss as a deduction? If so, then it makes perfect sense. You pay tax on the original asset. When you sell, you lose that asset in exchange for liquidity, which results in a redeemable loss for an itemized deduction. In that case if it wasn't taxed, the loss would effectively be accounted for twice, once as a deduction and once not being taxed.
- Jimminy, CoG of FF
Sigh. I think what I said was right; I just don't feel like defending numeracy in this case.
- Walt Crawford
This actually does make sense. A mortgage is a secured loan for a set amount of money. In one example, Borrower X takes a mortgage for $200,000 to purchase a $250,000 house. As part of that agreement, X agrees to pay back the $200k plus interest. If the home later drops in value to $100,000 the fact that X was given $200,000 by the bank does not change - X is still required to pay back the $200,000.
- Bubba Botts
The fact that the collateral has lost value does not change this loan. Therefore, if a portion of the $200,000 is forgiven due to short sale, that money is no longer a loan but income. That's why it's taxed.
- Bubba Botts
That's right. Alex Scoble took my hard earned money and squandered it by buying bad real estate. Now he doesn't even want to pay the taxes he owes on the stolen money. Next he'll complain that the cocaine he bought was cut with baby powder, so he couldn't make a profit. Ridiculous.
- Cristo
I'll give you a 7 on that troll. Well, OK. 7.5.
- Bubba Botts
Well, you'll have to try harder. And furthermore I'm taxing you on the 2.5 you didn't earn. Net 10 days, please.
- Bubba Botts
I think my LOL should be graded on a curve, and I'm not seeing much funny here lately.
- Cristo
Not sure I can argue with that logic. I got 64 out of 100 on my final exam for my last class and somehow still earned full credit for it. OK, I'll forgive your tax bill. But you'll have to claim it on line 73M on your tax form.
- Bubba Botts
Wasn't the Mortgage Relief Act supposed to fix this?
- Victor Ganata
Victor, only temporary amnesty was given to deficiencies.
- Bubba Botts
from BuddyFeed
Holding my tongue on this one, save to agree with Bubba.
- teleken
from BuddyFeed
It still applies through this year though, AFAICT http://www.irs.gov/individ... "The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2012."
- Victor Ganata
Someone has to pay for everyone the tax breaks the rich get. Did you know they are allowed to protect their 2nd house from a bankruptcy?.
- Jim
The funniest part? The bank takes all the interest, mortgages the short and gets to bill the loss to their insurance company, AND take it as a loss on their returns. Everyone is overed but the citizen. This kind of shite? Really makes me want to say god f@ck America.
- RudĩϐЯaЯïan
Rudi, banks own a very small percentage of mortgages. Chase, BOA, and everyone else merely service them even if a bank created it.
- Bubba Botts
from BuddyFeed
Alex - we need tax money to help fund the USPS. You should be thankful you get to pay this tax and help out your fellow neighbor.
- Jeff (Team マクダジ )
from iPhone
Well, no, the USPS's operations are not primarily funded by taxpayer money (they get some subsidies for delivering mail to the legally blind and for mailing out absentee ballots for overseas voters), but I guess they're going to need help with those pensions….
- Victor Ganata
I don't know, trying to extract maximum amounts of money out of people who just took a huge financial hit just doesn't seem like a very robust way to reliably generate revenue.
- Victor Ganata
I'm not the one who did a short sale. I'm able to pay on my house just fine. And seriously, in what warped world is a forgiven loan seen as "profit"? It's a complete and utter loss for the home owner. It's this sort of "accounting" that allows Hollywood to take a loss on every movie ever made and is completely unfair to regular Americans.
- Scoble, Alex Scoble
The problem is that you just know that corporations would totally abuse the cancellation of debt if wasn't taxable.
- Victor Ganata
Because he was in the Senate when they passed the Mortgage Forgiveness Debt Relief Act of 2007 by unanimous consent? Or because he voted for the Emergency Economic Stabilization Act of 2008 that extended the exception to 2012? True, it's all his fault.
- Victor Ganata
Alex, I've been through this (am going through it), but I didn't do a short sale. I declared bankruptcy and the bank foreclosed. In January, I received a 1099 Acquisition or Abandonment of Secured Property from Freddie Mac stating that I'm still liable for the full outstanding balance and therefore it's taxable income. It's interesting that there's no consistency in the mortgage amount between the creditors statements for my bankruptcy, the foreclosure notices and the amount on the 1099.
- Greg Guitarbuster
Yeah, Greg, now I have two personal reasons to be pissed off about this. This situation needs to be fixed because it's absolutely stupid.
- Scoble, Alex Scoble
Wow, I thought bankruptcy was an already existing exception to levying tax on cancellation of debt income, even prior to the Mortgage Relief Act. Damn.
- Victor Ganata
It's not stupid, it's a contrived, rigged game. Freddie Mac made the loan, secured by the property. They have the property. Did I mention that Freddie Mac was declared insolvent before I was delinquent on my mortgage and that the American taxpapers had to bail them out. Or that I was paying PMIP to protect them in case I did default. So the original loan was covered by the insurance company (someone like AIG which was bailed out). The home builder declared bankruptcy several years ago.
- Greg Guitarbuster
Victor, you're correct. At least, I think you are based on what I've read so far. There are other IRS forms to file regarding my bankruptcy and the discharge of the mortgage obligation.
- Greg Guitarbuster
It does seem in keeping with the recent news about possible shady goings-on at Freddie Mac.
- Victor Ganata
100% LOL for my comment compared to all other comments.
- Cristo
INDIANAPOLIS—Sources confirmed Friday that Indianapolis Colts quarterback Peyton Manning had been cleared by doctors to resume his career of being chased, clubbed, and thrown to the ground by 300-pound men, often with the 300-pound men falling on to...
- The Onion
Good morning, Stephen & Adam! I hope the day finds you both well! :) Stephen, that reference is lost on me. Clearly, I have some catching up to do here on FF! ;)
- Kelli H.
She's focusing on what's most important to her at this moment...the coffee! And good morning, lovely lass!
- caj needs a haircut
#SaturdayFF in college my friend scored tix to u2's zoo tv tour, but the seats were behind the stage, upper level. did not care, too excited. we went early so i could get tshirts for my friends. made our way up to the seats. as we were sitting there some cops came by and swapped our tickets with those they got off scalpers outside (busted!).
Ha! A screenwriter on the "Making It" podcast said that he hated Final Draft but that it was the best thing out there and he'd totally give the #sideeye to any writer that submitted to him outside of Final Draft.
- Spidra Webster
Super Puppy!! I felt a need to single out this photo from the other post (http://friendfeed.com/phoenix...) because I love those tiny fly away ears!! Puppy is too too cute!!! #bulldogpuppies
LOL huh, I hadn't noticed that my dad was basically flipping people off here. Eh, oh well. maybe he is flipping off the world with cute! ;)
- Rachel Lea Fox