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In many cases, individuals opt to sell their home in a short sale proceeding because they can no longer afford to keep their homes. Banks consider short sales to be an alternative to foreclosure and while a borrower might find a short sale to better than a foreclosure in terms of credit reporting he should consider the tax implications carefully.
Say you owe $100,000 on your mortgage and you are no longer able to make your mortgage payments. Due to the state of the economy you may only be able to sell your home for $80,000, leaving the bank $20,000 short. The bank agrees to close your file after you pay the $80,000 - after all, getting 80% is better than nothing.
The problem is that the other 20% isn't a gift or free ride. The government views that other 20% as "income" even though you never had the cash in hand. When you prepare your income tax return you will have to include the $20,000 from the short sale as income for that year and will be required to pay additional income taxes on it as well.
Keep the additional taxes you will owe in mind as you complete your short sale proceedings. You'll need to start putting some extra money away in order to be prepared when tax season rolls around again.
A person would only pay taxes if the home was an investment property in most circumstances due to the Mortgage Debt Relief Act. When this act was put in place it benefited those short selling their primary residence.
What else can I help you with?
What tax is paid by businesses only?
sales tax sales tax!
How do you Gross up sales tax?
Sales Tax / Sales Tax Rate = Gross Sale
Percent of sales tax for 1075 and sales tax is 43?
If an item costs $1,075.00 and the value of the sales tax is $43.00, the percentage of sales tax is 4%
Does Montana charge sales tax?
yes Montana has sales tax. there tax is 8.7 sales tax. NO, Montana does NOT have a Sales Tax. Or, to put it another way, there is a 0.0% sales tax. I have lived here for years...I don't pay a sales tax. Whoever said yes, must not live in Montana.
How do you post sales tax payable as journal entry?
debit sales tax expensecredit sales tax payable
What are the tax implications for individuals living in the United States?
Individuals living in the United States are subject to various taxes, including income tax, property tax, and sales tax. Income tax is based on the amount of money earned, while property tax is based on the value of owned property. Sales tax is a percentage added to the price of goods and services purchased. Tax implications can vary based on factors such as income level, deductions, and credits. It is important for individuals to understand and comply with tax laws to avoid penalties.
What are the tax implications of buying a car with cash from a private seller according to the IRS?
When you buy a car with cash from a private seller, there are no direct tax implications according to the IRS. However, you may still need to pay sales tax and registration fees to your state or local government.
What are the tax implications of buying a car with cash according to the IRS?
When you buy a car with cash, there are no specific tax implications according to the IRS. The purchase itself does not directly impact your taxes. However, you may be able to deduct sales tax or other expenses related to the car purchase if you itemize your deductions on your tax return.
Is there a sales tax on furniture in Massachusetts?
Yes, in Massachusetts, there is a sales tax on furniture. The state imposes a 6.25% sales tax on most tangible personal property, including furniture. However, certain items like custom-made furniture may have different tax implications, so it's always advisable to check specific guidelines or consult with a tax professional for detailed information.
What tax is paid by businesses only?
sales tax sales tax!
A tax on things you by?
Sales tax, of course.
How do you Gross up sales tax?
Sales Tax / Sales Tax Rate = Gross Sale
Juan's purchase before sales tax was added totaled 46.00 The total including tax was 48.76 What was the sales tax rate?
Total with sales tax $48.76 minus total without sales tax $46.00 = sales tax $2.76. Sales tax $2.76 divided by purchase $46.00 = sales tax rate 6%.
Percent of sales tax for 1075 and sales tax is 43?
If an item costs $1,075.00 and the value of the sales tax is $43.00, the percentage of sales tax is 4%
Does minnesota charge sales tax on labor?
No, you do not pay sales tax on labor. Sales tax is for materials.
Does Montana charge sales tax?
yes Montana has sales tax. there tax is 8.7 sales tax. NO, Montana does NOT have a Sales Tax. Or, to put it another way, there is a 0.0% sales tax. I have lived here for years...I don't pay a sales tax. Whoever said yes, must not live in Montana.
What is the state sales tax in Oregon?
There is no sales tax in the state of Oregon.
