The Worst May Still Be Coming For Real Estate Investors


This post is in: Real Estate
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05-17-2010Just when real estate investors who had values decline can least afford it, the next hit may still be coming. Here are three things to look out for:

1. Is your former lender about to sue you?

If you’ve had a foreclosure or deed-in-lieu (DIL) of foreclosure, you’ve gone through a lot already. If you received a Form 1099-C, then the lender has forgiven the debt and now all you have to deal with are the taxes (which can be bad enough).

5-17-10But if you haven’t received a Form 1099-C that could mean that the lender has not forgiven the debt yet. For that matter, if you haven’t received either a Form 1099-A or Form 1099-C, your property maybe one of the almost one million in ‘shadow inventory.’

If there hasn’t been a Form 1099-C, the lender may be planning to sue for you the deficiency. Depending on your state, they may have 4 years or more to come back after the deficiency is known. That means if they haven’t yet taken possession and the property is still in shadow inventory, it could be years before you know if you’re in the clear.

TIP: If you can negotiate an estoppel with a DIL, you’ll be in the clear. If not, talk to an attorney who specializes in this type of law to make sure you don’t have a lawsuit in the making.

2. The IRS is targeting losses on property disposals

5-17-10-2In a new internal IRS audit handbook, the IRS is instructing their auditors to look for anyone who has disposed of property at a loss.

Specifically they will be asking you to prove the basis in your property.

On May 25, 2010 (Tues), our coaching session will go into great detail about basis, how to calculate it and how to prove it.

Then in June, our first coaching session is on Audit Survival. This may be the most important coaching session of the season!

3. You might have lost your HELOC deduction

Your home equity loan is deductible as long as the total of your mortgage debt is less than the fair market value of your property. Look for the IRS to check up on this one!

TIP: If you have used home equity funds to invest in business or real estate, make sure you have proof of that. The interest will then be deductible against the business or investments.



2 Comments

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