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1099 Court Case

If you had a short sale, foreclosure, deed-in-lieu or loan modification with principal reduction in the last few years, this may interest you. In each of those situations I noted, you probably “enjoyed” some kind of principal reduction and you are probably wondering if your lender can pursue you for it. There is a wrinkle in regards to the issuance of a 1099 that I’ve been keeping my eye on that just got really interesting…

Let’s say that your lender tells you verbally, or even in writing, that they will allow the short sale, loan mod, whatever, to proceed, but they ARE going to pursue you for the deficiency at some point in the future. But then in the mail you later get a 1099-C from them, which is meant to advise the IRS (and you) that the debt was “cancelled” and that you may have to pay tax on it. Now, let’s put aside the TAX issue for a moment, but let’s look at what just happened. Your lender is telling you and the IRS that they have, wait for it….CANCELLED the debt. On top of that, you may have to pay tax on that CANCELLED debt. I’ve always wondered in that situation if the lender were to pursue you later, couldn’t you bring that 1099-C to court and show that the debt was, in fact, “cancelled?” There was a recent bankruptcy court case in Tennessee that is VERY interesting where the judge decided that the 1099-C “reflects” that the lender did, in fact, cancel the debt and incur a possible tax liability. The judge said that regardless of whether the borrower actually had to pay any tax on the forgiven debt was irrelevant.

Now, this court case doesn’t apply exactly to California, but at least it’s a start! So if you’ve received a 1099-C from your lender and then they are trying to pursue you for that deficiency, be sure to hire a good attorney and mention this court case: William Reed case (Eastern District of Tennessee, Bankruptcy Court, Number 12-30049, decided May 14, 2013).

I AM NOT A LEGAL OR TAX EXPERT. PLEASE CONSULT ONE IN REGARDS TO YOUR SITUATION. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). #1 in Brentwood listings sold since 2000. To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty.

End Of The Year Tax Tips

The end of the year is fast approaching. Now is the time to do some planning ahead to try to reduce your income tax bill if you can. Here are two ideas for you to consider.

1. Pay your property tax bill in December (if you can). If your property taxes are not impounded, that means you write the checks yourself. If this is you, and you can afford it, consider paying the 2nd installment (the one due next February) before the end of this year. That could increase your deductions for the 2013 tax year.

2. Pay your January mortgage payment(s) in December. Same reason as above. This can generate an extra month’s worth of interest deduction on your taxes.
You’ll want to check with your tax professional first to see if it is more beneficial to increase your deductions this year versus next. If, for example, you believe you will be in a lower tax bracket next year because of a reduction in income, you may want more tax breaks this year, and vice versa. If this seems backwards, consider that the higher your marginal tax rate, the more beneficial each dollar of deduction is.

This is an important consideration, because by pulling some of your 2014 deductions into 2013, you will be effectively reducing your 2014 deductions by that amount. If you do this again in 2014, you will be roughly breaking even (assuming you will be in the same tax bracket). However, due to the time value of money, I think you’d rather have the tax break THIS year versus next year.
Please check with your tax professional for specifics to your situation. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

Contingent Offers Are Back!

Earlier this year I had a past client call me about selling the home they are in now and buying another home in town. They asked if we could go look at homes first, write an offer, and THEN put their home on the market. I told them that unfortunately, that would be a waste of time because almost NO sellers would even consider an offer contingent upon the buyer’s home selling when it isn’t even on the market yet. Even if their home was in contract and just waiting to close, we’d probably still get beat out by non-contingent or cash offers. Unless they could qualify to buy the next home without needing to sell their home, it was going to be really difficult to make that transition.
Well, guess what? I just called them back and said that things have changed! Not only have the bank-owned homes shriveled up, even the short sales are starting to dry up, and the investor-buyers with cash have pulled back on anything over $300-400K. What this means is all of a sudden I’m seeing some home sellers willing to look at offers contingent upon the buyer’s home closing escrow again!

So if you need to make a move and you already own a home, this is welcome news! Now just to be clear, if your home isn’t on the market yet, or it is on the market but you don’t have an offer yet, then you may still have an extremely difficult time getting your offer accepted. Even if you have a solid buyer in contract with all contingencies removed, there are still some sellers that won’t even look at your offer. BUT I’m seeing more and more sellers that now will look at offers where the buyer’s home is in escrow. This may be the grease we need to get the wheels moving again to get more inventory on the market. I’ve spoken to many people who are “trapped” in their home because they can’t buy the next home without selling theirs first, so this is a good development!

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). #1 in Brentwood listings sold since 2000. To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty.

Free Thanksgiving Dinner/Charity Opportunity

Thanksgiving is just around the corner! I am chairing the annual Golden Hills Community Church’s FREE Thanksgiving Dinner for Brentwood. We serve a hot meal of turkey, ham, and all the fixin’s. We also try to send everyone home with a bag of food and some clothes. This will be at the Brentwood Vet’s Hall at 757 First St. from 10:30 to 2:00 on Thanksgiving Day. All are welcome to attend.
If you know anyone in the local area that could use a meal that day, but can’t make it physically to the Vet’s Hall, please email me their name, address and phone number at Brian@SharpHomesOnline.com and we’ll get a meal(s) to them Thanksgiving Day.
We are usually blessed with more than enough physical help the day of the event to serve the meals, but we could always use more canned goods and/or clothing. You can drop them off at my office anytime between now and Thanksgiving Day. We are in need of canned food (soup, tuna, veggies, fruits, etc.), non-perishables like noodles, cereal, bread, bottled drinks, etc. We can also use any type of clean, usable clothing, blankets, jackets, etc. New baby diapers in any size are also VERY popular! We are located at 320 Fairview Ave. in Brentwood. If you come by after hours, just drop them off on our porch.
If you will be around on Thanksgiving Day, you could also cook and carve a turkey (or ham) and bring it to the Vet’s Hall in the morning.. Other needs for the day of the event will be pies, sweet potatoes and stuffing. The sweet potatoes and stuffing will need to be cooked and then dropped off Thanksgiving Day in a disposable pan. By the way, a big Thank-You to the Brentwood American Legion Post #202 for all their help and support for this event.
If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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