Short Sale

[Summerwind]

"I have heard that, with a short sale, the difference btwn what is owed and the sale price is taxed as income for the buyer"

This is not correct, the PO can be taxed on the def balance but not the new owner.

 

[chuck1]

Ron & Summerwind,

You are 100% correct about the boats, second homes, etc. I was only talking about primary home short sales. Even then if the bank will forgive X amount you still have to deal with PMI insurance. I'm working on a deal right now that the bank has agreed to the short sale (Owner lost job and went through a divorce, no way on one income can he make the payments) but the PMI wants 30K. What I'm afraid is going to happen is the bank will just foreclose on it next month.

 

[rondds]

This is not correct, the PO can be taxed on the def balance but not the new owner.

OK, thanks for the correction. That actually makes more sense.

 

[sbw1]

delete

delete. delete. delete.

 

[sbw1]

Another issue is liens on boats. The bank may forgive the loan but the lien may not go away. You need to make sure the transaction is legally clean and these are not your typical liens.

 

[aboatman]

I have been involved the past few years with many "short sales" and have encountered these situations depending on circumstances.
1. Bank releases title on said vessel to new buyer and then takes a loan for the balance.
2. Bank releases title to new buyer, and "forgives" the balance on original loan. The difference then "1099" on the ORIGINAL LOAN HOLDER (seller) not the BUYER.