Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

I am 70 yrs old. Still working full time. I have tryed for

Customer Question
I am 70 yrs old...
I am 70 yrs old. Still working full time. I have tryed for months to refinance my house but I am upside down, have good credit, work, etc etc no one will touch it. I have decided to walk away and stop throwing good money after bad. I know this will go on my credit for two yrs. How will it affect my credit cards? I do not have a second on the property
Submitted: 8 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 10 hours by:
8/2/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified
Hello monkey,

Assuming that this is your primary residence, walking away from your payment obligations and allowing the home to go in to foreclosure will at least have no tax consequences to you, if the foreclosure occurs before the end of 2011.

Normally when you have a debt that is cancelled or forgiven, even though you may walk away from the obligation of the debt itself, you are still liable for income tax on the amount of the debt which was forgiven. In the case of a home loan, this can often be quite substantial.

However, due to the current mortgage lending crisis, Congress has passed temporary legislation which allows taxpayers who go through a foreclosure on their primary residence to exclude the amount of that debt from their taxable income. This exclusion applies to foreclosures occuring up through the year 2011.

From a credit standpoint, any negative credit incident can legally stay on your credit report for 7 years, not just 2 years. So obviously this will have some impact on your future abiity to access new lines of credit.

As far as credit cards which you currently hold, your line of credit with those companies is always subject to review. Most credit card companies will periodically review your credit report on an average of once each year. If at the time of their review they find that your credit score has dropped significantly, they may choose to either lower your current line of credit or to cancel your card entirely. Unfortunately that's all part of the drawbacks to having a poor credit score.

But on the other hand if you can no longer afford to make these payments, then you have to weigh the benefits of walking away from the home obligation compared to the negative aspects of having your credit score lowered. In the worse case scenario, if your existing credit cards were to be cancelled, you can always obtain other credit cards which require you to deposit money up front to cover the line of credit they extend to you.

But the chief advantage here that I think you need to consider is the fact that going through this foreclosure now, or sometime before the end of 2011, will allow you to escape the burden of paying tax on that cancelled debt. Considering that this could be a considerable amount of tax that you might owe, that may far outweigh the possible negative consequences of having this put on your credit report.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you monkey, and let me know if you have more questions.



Ask Your Own Tax Question
Customer reply replied 8 years ago

Thank you is there anything I need to do for the mortgage co. As to notification etc. or just say nothing at this time and walk?

 

 

Tax Professional: Merlo, Accountant replied 8 years ago
Hello again monkey,

There is nothing that you are actually required to do. If you simply discontinue making the payments on the home, then the bank will at some point finally start the foreclosure proceedings. In the meantime, you may as well go ahead and continue to live in the home, as it will save you money on renting another place or at least buy you some time to find another place to live.

You may want to notify the bank of your intentions to eventually walk away from the property, as it may at least cut down on the phone calls you are sure to start receiving if they have advance notice of yur intent. They may also at that point want to offer you some other refinancing options which they did not make available to you before, so you may want to contact them just to see what they have to offer.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you monkey.

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified
Merlo and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Merlo Your Own Question
Merlo
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
9,783 Satisfied Customers
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad

Merlo is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Under current law a 100,000 taxable income pays $10,365 plus
Under current law a 100,000 taxable income pays $10,365 plus 25% of the amount exceeding $79,400 i.e. about $16,000. Under tax reform will the tax be $25,000? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
We are being audited for 2014. I paid a credited card from
We are being audited for 2014. I paid a credited card from out daycare which which is considered schedule C for rental property officer remodeled and repairs schedule E. Since the IRS has that year op… read more
abci168
abci168
Principal
27 satisfied customers
If your taxable income is $0 (actually negative) is there a
If your taxable income is $0 (actually negative) is there a penalty for late filing? Do you need to file at all? What is the 2016 filing deadline with an extension?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Is an inheretance taxable income. What do you want to know?
What do you want to know? My question: is an inheritance a taxable income? … read more
abci168
abci168
Principal
27 satisfied customers
My wife died leaving a credit card debt. Can they put a lien
My wife died leaving a credit card debt. Can they put a lien on our home … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have no taxable income. I am 60 years pf age and a
I have no taxable income. I am 60 years pf age and a caregiver to my special needs daughter. She has a trust fund which pays me to be able to stay home and not work. I also receive SSI for being mothe… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
If you take a personal loan to pay off credit card debt,
If you take a personal loan to pay off credit card debt, will that be considered taxable income by the IRS? The debt has not been negotiated down and the loan will be paid back over 5 years.… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
A friend receives taxable income that he can characterize
A friend receives taxable income that he can characterize EITHER as self-employment or non-SE. If he chooses the SE route, it will increase his Social Security payment, almost immediately as he is on … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Undistributed taxable income previously taxed. Have 3
Undistributed taxable income previously taxed. Have 3 shareholders with balances due to them from previous years. Can it be paid all in one year to bring their amounts owing to zero until the next pro… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
I had a settlement agreement with a credit card company and
I had a settlement agreement with a credit card company and the last payment was made on Nov 2, 2016. The agreement indicated that after the last payment the remaining balance would be forgiven. I exp… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
I'm applying for the Chase Sapphire Reserve credit card.
Hello! I'm applying for the Chase Sapphire Reserve credit card. When applying online it asks me if I rent or own my house and how much do I pay monthly. I currently live with my boyfriend and we share… read more
James Daloisio
James Daloisio
Attorney
Doctoral Degree
56 satisfied customers
I have 10 ATM and 20 Credit card machines for profit
I have 10 ATM and 20 Credit card machines for profit operation and will use Section 179 treatment for whole ATM and credit card machines purchased in 2016 for 2016 corp tax return.1) ATM would qualify… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
How is the statue of limitations on a credit card debt in
How long is the statue of limitations on a credit card debt in the state of Florida … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
How can i pay my 1120/1120s taxes online thru credit card or
how can i pay my 1120/1120s taxes online thru credit card or debit card? i know i can pay thru eftps payment system but i wanna use my credit or debit card to pay my corporation taxes. Please help.… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Credit card processing master agent has 30 sub-agents under
Credit card processing master agent has 30 sub-agents under master agent. A master agent receive all residual income from merchant bank and then distribute residual income to 30 sub-agents. In this ca… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
If you do not work, retired, and receive no taxable income,
If you do not work, retired, and receive no taxable income, do you have to file a tax form… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
I need to do a reset credit card authorization. I paid my
I need to do a reset credit card authorization. I paid my taxes with credit card, Turbo tax denied it, made corrections and i owe more. Wont take credit card again.… read more
Marcia Mitrano
Marcia Mitrano
MBA
23 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x