How Does Bankruptcy Affect Home In Foreclosure?
I recently did a title search on a property going to foreclosure and it turned up that the owner filed for ch. 13 bankruptcy while in the pre-forclosure phase. The trustee had objected the confirmation and motioned to have it dismissed, which it was.
If it was not dismissed and the owner was allowed bankruptcy what effects would it have on the foreclosure?
Thanks.
BK stops the foreclosure from progressing to completion until the bankruptcy is dismissed or the lender obtains a relief from the automatic stay. Or if the trustor actually manages to complete his BK13 plan and bring the loan current the foreclosure will be cancelled.
What address do you use for your tax returns, voting registration, drivers license, etc. Did you record the deed transfer (from your mom to you)? Assuming you transferred the deed, are you claiming a property tax principal residence home exemption (assuming your jursidiction has one) in YOUR name - this would be stated typically on YOUR property tax bill? Is the property tax bill in your name or your moms (I assume yours). Where did you sleep on the weekends - apt. or house?
Do you have credit card or checks from stores around your principle residence. What are the utility bills are the principle residence versus your apartment. Do you have full cable with HBO, Showtime, etc at your principle residence and no cable at your apartment. Basically, the IRS sees right through what you are trying to do. Nobody goes home to sleep in a bad part of town.
http://www.nysscpa.org/cpajournal/2005/505/essentials/p52.htm
Quote: The regulations take a holistic approach to determining the principal residence when a taxpayer alternates between properties. In addition to considering the amount of time the property was used during the year, other relevant factors include, but are not limited to, the following:
The taxpayer’s place of employment;
The principal place of abode of the taxpayer’s family members;
The address listed on the taxpayer’s federal and state tax returns, driver’s license, automobile registration, and voter registration;
The taxpayer’s mailing address for bills and correspondence;
The location of the taxpayer’s banks; and
The location of the taxpayer’s religious organizations and recreational clubs.
The above factors are not all-inclusive. Another relevant factor might be the location at which the taxpayer claims the homestead exemption for local property taxes. Amounts paid for utility bills (e.g., water, electricity, gas, telephone, etc.) might also help establish which home is the principal residence. Some of the above factors, such as the place of employment and the location of taxpayer’s family members, are rigid and not easily affected by tax planning. For others, though, tax planning can help in ambiguous cases.
BTW - I googled
principal residence gain tax use tests
Bgrossnickle, for the moment, I will comment on one thing: I go home to a bad part of town to sleep every night for exactly that reason- to keep my property and my pets safe. There is NOTHING to "See through". As insane as it sounds, and I know that it does, it is the bizarre truth. It is both a physically and emotionally exhausting lifestyle. Without going into other personal factors that had further prompted this circumstance, know that in this case, truth is definately stranger than fiction. I too doubt that the IRS will see it this way.....
I would agree with newkid on all accounts.
On a side note, having dealt with the hood before. The worst thing you ever want is a vacant house when the sun goes down.
Jeff
Quote:Is it common practice/legal for the settlement attorney or title co. not to report the sale of a property?
Definitely. The IRS does not want any paperwork on tax free income clogging their system. The settlement attorney/title company does not file a 1099 with the IRS unless there will be some tax liability from the sale.
If the sale price is less than $250K and if you meet the two year ownership and occupancy requirements, then all of your sale profit is excluded from capital gains and the sale is not reported to the IRS, nor do you report it on your personal tax return.
I agree, newkid. My position would be that the sale of the home is not a taxable event.
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