3 Properties in foreclosure and tax complications!?

Question

Hi guys, Here is my situation. I have 3 properties i stopped paying for and soon or later the bank is going to take them. Between all 3 of them the mortgages and missed payments are about 1.2m. The real market value of all 3 together is about half a mil. It looks like if the banks get them and sell them they will hit me with 1099c and this will be a total disaster for me. One of them have a FHA loan and i might be able to get away since i can claim it as a primary residence. The problem is that i have a coop in a different state and i live there.

Could you please advise me what my options are?

Thank you very much in advance.

Could you please advise me what my options are?

Thank you very much in advance.

Bryan Hancock · Answer

You could try to get another investor to negotiate for the satisfaction of the loan as part of a short sale.  Are the notes on all of these properties full recourse?

Jon Holdman · Answer

Definately think you need to find a good CPA and a good attorney.  NJ is a judgment state.  For investment properties and with you having a good job, its likely the lenders will seek judgments.  Slapping you with the big tax bill would seem like the lesser evil, though a tax bill on $700K in phantom income would be extremely painful.

Have they said no to short sales?  That won't eliminate the phantom income, but might net more that letting them go to foreclosure.

Chavdar Kehayov · Answer

The properties are in NJ i live and work in NY.

I have a w2 job that pays well.

My CPA had done some crucial mistakes with my taxes and i am in a process of looking for a new one.

Currently i am considering all options including bankruptcy as last resort..

Bryan Hancock · Answer

If your personal situation merits it you may try talking to a bankruptcy attorney.

Jon Holdman · Answer

What state are the properties in?

Can you prove insolvency?

What does your CPA have to say?