Now's not the time for LLNS to be putting people in the street. However, ask them if they care.
Here's todays news. How many people at LLNL after Jan 31st, 2007 and until April 2008 will be in a situation where they'll have to sell a home that's worth less than they paid for it. That alone is not good, but not it gets worse.
If you borrowed $600K to buy your home and then had to sell it for $400K for what ever reason you still have to pay the taxes on the $200K difference. What a deal for the banks and the federal government.
Here's todays news. How many people at LLNL after Jan 31st, 2007 and until April 2008 will be in a situation where they'll have to sell a home that's worth less than they paid for it. That alone is not good, but not it gets worse.
If you borrowed $600K to buy your home and then had to sell it for $400K for what ever reason you still have to pay the taxes on the $200K difference. What a deal for the banks and the federal government.
Comments
Oil and Your Future
Someone from upper management of LLNS, please tell us how the hell you are going to accomplish that?
and sell at $400K you have a tax loss that reduces the tax on your regular income. what tax on $200K? this is panic talking
Wrong answer. The $200K that you did not recover upon the sale counts as earned income and you are required to pay federal income tax on that money as well as what you made all years long. Enjoy the good news. Call the IRS and you'll soon find out what your obligations are.
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IR-2007-159, Sept. 17, 2007
WASHINGTON — The Internal Revenue Service unveiled a special new section today on IRS.gov for people who have lost their homes due to foreclosure. The IRS also reassured homeowners that, although mortgage workouts and foreclosures can have tax consequences, special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.
The new section of IRS.gov includes a variety of information, including a worksheet designed to help borrowers determine whether any of the foreclosure-related relief provisions apply to them. For those taxpayers who find they owe additional tax, it also includes a form they can use to request a payment agreement with the IRS. . In some cases, eligible taxpayers may qualify to settle their tax debt for less than the full amount due using an offer-in-compromise.
The IRS urges struggling homeowners to consider their options carefully before giving up their homes through foreclosure.
Under the tax law, if the debt wiped out through foreclosure exceeds the value of the property, the difference is normally taxable income. But a special rule allows insolvent borrowers to offset that income to the extent their liabilities exceed their assets.
The IRS cautions that under the law, relief may be limited or unavailable in some situations where, for example, part or all of a home was ever used for business or rented out.
Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. By law, this form must show the amount of debt forgiven and the fair market value of property given up through foreclosure. Though the winning bid at a foreclosure auction is normally a property’s fair market value, it may not necessarily reflect its true value in some cases.
The IRS urges borrowers to check the Form 1099-C carefully. They should notify the lender immediately if any of the information shown on their form is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home (Box 7).
The IRS also reminds lenders of their obligation to provide accurate information on the Form 1099-C. By law, the lender must send a copy of this form to the IRS. IRS follow-up contacts with taxpayers involved in foreclosure are based largely on the information reported on this form, and whether it conflicts with information provided by the taxpayer on their federal income tax return.
The IRS normally initiates these follow-up contacts by sending the borrower a notice. The tax agency urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.
Related Item:Questions and Answers on Home Foreclosure and Debt Cancellation
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http://www.whitehouse.gov/news/releases/2007/12/20071220-3.html
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The bill I sign today will help this effort by ensuring that refinancing a mortgage does not result in a higher tax bill. Under current law, if the value of your house declines and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as money that can be taxed. And of course, this makes a difficult situation even worse. When you're worried about making your payments, higher taxes are the last thing you need to worry about. So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. And it's a really good piece of legislation. The provision will increase the incentive for borrowers and lenders to work together to refinance loans -- and it will allow American families to secure lower mortgage payments without facing higher taxes.
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