a friend is thinking about returning his house to the bank as it has become impossible for him to afford it. Will he owe taxes to the IRS or onybody?

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a friend is thinking about returning his house to the bank as it has become impossible for him to afford it. Will he owe taxes to the IRS or onybody?

He is concerned about whether he will be responsible for taxes during a foreclosure and also would his permanent home and other assets in FL be at risk?

Asked on May 11, 2009 under Real Estate Law, Florida

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

Your friend should talk to a Florida real estate attorney, for the best way to go about this.  One place he can find a lawyer is our website, http://attorneypages.com

For personal income taxes, the best source of advice is usually a CPA or a tax lawyer.  As a general rule, as long as he does not owe the bank more money than he has put into buying the property (and any permanent improvements), he wouldn't have a profit to report as capital gain, and he might even be able to get a tax break on the loss, especially if he rented the house out.

Property taxes, though, keep going on, no matter what, and as long as he still owns the house, that would be your friend's obligation.  There might be a way to make the transfer happen quickly, since it seems to me that doing that would be in everyone's best interest.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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