Nager Law Group LLC
  • HOME
  • CONTACT US
  • WHO WE ARE
  • WHAT WE DO
  • BLOG
  • CLIENT QUESTIONNAIRE
  • MAKE A PAYMENT

New Location Opening August 1, 2017!

7/28/2017

0 Comments

 
I am pleased to announce that Nager Law Group, LLC is opening its second location in Gaithersburg, Maryland on August 1, 2017.  The new office will be located at 9711 Washingtonian Boulevard, Suite 550, Gaithersburg, Maryland 20878.  More details will follow so stay tuned!
0 Comments

Short Sale and Deed in Lieu of Foreclosure - Overview and Potential Tax Implications

10/23/2014

1 Comment

 
If you owe more on your real property than what it is worth, you might consider doing a short sale or deed in lieu of foreclosure.  Here are the basics that you need to know about both:


Overview
Short Sale
A short sale is the sale of a real property for less than the total debt balance remaining on the property, including mortgages and other liens.   In a short sale transaction, the seller or mortgagor (i.e. borrower) negotiates with the mortgagee (i.e. the lender) and other lien holders in order for them to accept the proceeds from the sale in exchange for releasing the mortgages and other liens on the property.  Short sale is often preferable to foreclosure because: (1) it can and often does result in a deficiency waiver, whereby the lien holders will cancel any debt that the mortgagor would have otherwise owed after the transaction; (2) it has less of an impact on a mortgagor's credit score; and (3) it is better for the neighborhood because it often results in a higher sale price.  However, not all short sales are approved and not all short sales result in a deficiency waiver.  If you are considering a short sale, it is important to discuss the matter with competent legal counsel.

Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is a deed instrument in which a mortgagor conveys all interest in a real property to the mortgagee to satisfy a loan that is in default and avoid foreclosure proceedings. It offers several advantages to the mortgagee:  (1) it releases her from all or part of the indebtedness; (2) it avoids the public notoriety of a foreclosure proceeding, including advertisement in newspapers, listing in public records, etc.; and (3) it is better for her credit rating.  If you are considering a deed in lieu of foreclosure, it is imperative that you discuss the matter with an attorney.

Both short sale and deed in lieu of foreclosure are most often preferable to foreclosure.  This is because a foreclosure can result in a large deficiency balance which the mortgagor can sue on and get a judgment against you.  With a judgment, the mortgagor may be able to garnish your wages, place liens on your property and levy your bank accounts. 

Potential Tax Implications of Short Sale or Deed in Lieu of Foreclosure
If a mortgagee forgives all or part of a debt as part of a short sale or deed in lieu of foreclosure, the mortgagee will likely receive a 1099-C ("Cancellation of Debt") form.  If this occurs, you may need to include the forgiven amount as income for tax purposes.  To avoid this, you should look to the following:

Mortgage Forgiveness Debt Relief Act of 2007
You may qualify for an exclusion from tax liability resulting from cancellation of debt income if your short sale or deed in lieu of foreclosure deficiency was forgiven between 2007 and 2013, and if you can meet the requirements of the Mortgage Forgiveness Debt Relief Act of 2007. This Act allows taxpayers to exclude certain types of forgiven debt from their taxable income, as long as the forgiven debt was used to: (1) buy, build, or substantially improve a principal residence, or (2) to refinance debt incurred for those purposes. You can only exclude $1 million of forgiven debt, or $2 million if you are married and filing a joint tax return.

Bankruptcy
Debts discharged in bankruptcy are not considered taxable income.  Sometimes bankruptcy cases are filed solely to avoid the tax implications of a short sale or deed in lieu of foreclosure transaction.  


Insolvency
If you are “insolvent” (meaning your total debts are more than the fair market value of your total assets) at the time that the debt is cancelled, the forgiven debt may not be taxable.


In conclusion, short sale and deed in lieu of foreclosure offer attractive alternatives to foreclosure in many instances.  Beware of pitfalls such as tax implications.  It is highly advisable that you contact a competent attorney to discuss these matters should you be in a situation that warrants the use of these options.   


The above information is for informational purposes only and does not constitute legal advice.   If you have questions or comments, feel free to contact me by visiting my website at www.nagerlaw.com.
1 Comment

Bankruptcy is Not a Bad Word

10/20/2014

0 Comments

 
Bankruptcy is not a bad word. It is simply a powerful tool which offers help to those in need of protection from legal action, garnishments, foreclosure, creditor harassment, repossessions, etc. Many believe that it is used to scam the system, or that it is used by those who are "irresponsible". I can tell you that most people file due to things largely beyond their control, such as death, disability, divorce, lost income, illness, failed business ventures, etc. I never really understood the stigma associated with it. I think that it is largely due to a lack of understanding. This is why I've made it my personal mission to educate as many people as possible about bankruptcy. I hope that my efforts have and will continue to make a difference.
0 Comments

    Author

    Alon Nager is the founder and owner of Nager Law Group LLC.

    Archives

    July 2017
    October 2014

    Categories

    All

    RSS Feed

Contact Us

Howard County Office (Walk-Ins Welcome/Correspondence Address):

Nager Law Group LLC
8180 Lark Brown Road
Suite 201
Elkridge, MD 21075


Montgomery County Office (By Appointment Only):

Nager Law Group, LLC
9711 Washingtonian Boulevard
Suite 550
Gaithersburg, MD 20878




Disclaimer:  The information contained in this website is provided for informational purposes only, and should not be construed as legal advice on any matter. The transmission and receipt of information contained on this website, in whole or in part, or communication with Nager Law Group, LLC (“the firm”) via the Internet or e-mail through this website does not constitute or create an attorney-client relationship between the firm and any person. The material on this website may not reflect the most current legal developments. The content and interpretation of the law addressed herein is subject to revision. The firm disclaims all liability with respect to actions taken or not taken based on any or all of the contents of this site. Do not act upon this information without seeking professional legal counsel. The website may contain references to matters that have been handled by the firm. The results portrayed in those matters were dependent upon the facts of those particular cases, and results will differ if based on different facts. This website may also contain references to past and present clients. Such references are not intended to be testimonials or endorsements of the firm, and they do not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.  All uses of the contents of this site, other than personal uses, are prohibited. These materials have been prepared by the firm for informational purposes only and are not legal advice. This information is not intended to create, and receipt of said information does not constitute, a lawyer-client relationship.
Proudly powered by Weebly
✕