 |
Buyout |
| |
 |
I am relocating due to a job change. My new employers is offering to buy out my home if it does not sell. It appears we will be losing regardless if we sell it or they buy it out. I know the loss is not deductible, however I read on the IRS website that the buyout will be considered income. If I'm losing money, how could this be considered income?
Here's my situation : Purchased for 580K 2yrs ago, buyout for 530K. |
| |
| |
 |
You're right, the IRS is not interested in a loss on the sale of your home. What concerns them is how much you borrowed on your mortgage, and whether you paid it all back. Let's say you borrowed $500,000 to buy the house. The money wasn't taxed, because it was a loan that was going to be paid back. But you find you can sell for only $480,000. If you're lucky, the bank doesn't insist you still owe the lst $20,000. Sometimes they agree to accept that amount (a "short sale") and forgive the remaining $20,000. At that point the IRS says you once received that $20,000 and never paid tax on it. Now the amount of the forgiven debt counts, in their eyes, as income and you owe tax on it. We're not sure this applies in your situation anyhow, because I don't know the mortgage amounts involved. |
| |
|
Edith
Originally published on August 17, 2007 |
| |
| |
|
Back to Summary
|
< Previous | Next > |
| |
|
|
