Income Specifications For $ 200,000 Mortgage Loan
My wife and I purchased a house in October of 2008 and claimed the $ 7,500 1st time residence buyers tax credit on our tax return. We produced our 1st payment when filling our 2010 taxes, for that reason, have a balance of $ 7,000 left to pay the IRS.
It is now June of 2011 and we are looking to move out of this house do to job changes, etc. We purchased the residence for $ 200,000 and owe about $ 195,000. Due to the housing crash, there is no possible way we can get what we owe to payoff the mortgage. Due to the fact of this, we are seeking to lease the residence rather than sell it with a short sale agreement. We are conscious that if we had been to sell the house for anything much less $ 192,500 ($ 200,000 – $ 7,500), the IRS will forgive the balance of the loan because we did not make a profit on what they take into account is the actual purchase cost.
What we need to know is will we have to pay the whole balance ($ 7,000) if we choose to lease the residence out even although we are about $ 30,000 underwater on the mortgage? If we do have to payoff the $ 7,000, when will the IRS anticipate it to be paid?
We are skeptical as to regardless of whether or not we want to rent our home vs selling it through brief sale vs letting the bank foreclose on it. I am out of function on disability proper now and only get 60% of my regular salary and my wife only makes about $ 300 a month exactly where she works, so we don’t have any dollars to function with. We are thinking about moving in with her parents for a short although, which will technically enable us to claim our home as our primary residence until we uncover something of our own. Alternatively, we are searching to borrow some funds from her grandmother to support purchase a new residence, which will turn our existing home into income property. If we are able to secure a mortgage on a new home, the most viable option is to let the bank take our existing residence, nevertheless, I would like to stay away from this due to the fact I do not want to scar my credit for the next 10 years. Any and all advise is surely welcomed. Thanks
Answer by Ross
If you still own the residence you still would have to pay.