Do I Need Legal and Tax Advice for a Short Sale or Foreclosure

by Chase Dubs on February 13, 2012

We hosted a short sale and foreclosure panel discourse yesterday. The panel members included Scott Drucker, a short sale/real estate lawyer from Mack, Drucker and Watson, Eric Viavattene, a wickedly smart CPA from Dobbins Financial and Gerry Russell, the managing broker with Realty Executives Phoenix. Once again we were reminded how crucial it is to find BOTH legal and tax guidance when thinking about a short sale or foreclosure in Phoenix, AZ. Yes, we did the bold face thing. We actually do mean this.

There's much confusion about the legal and tax implications of either a short sale or foreclosure. We’ve taken well over 100 hours of continuing education and specialty conventions covering short sales/foreclosure and each time we leave more well informed, yet daunted by the complexities involved. The main area of bewilderment is the difference between the legal and tax consequences. It is simply like night and day.

Just so you know, we are not going to attempt to explain the variances between the legal side and tax/IRS during a short sale or foreclosure in this article.. There are simply too many variables to cover, and we are not lawyers or tax professionals. That said , below are a few things both Eric and Scott discussed in the debate we would like to pass on.

Short sales regularly offer more protection to the householder than a foreclosure. This isn't a definite though and should be explored by consulting both a tax and legal pro.

The Arizona Anti-Deficiency laws don't always protect a home owner from IRS liabilities during a short sale or foreclosure. The anti-deficiency laws offer legal protection in explicit circumstances, yet may not guard against an IRS obligation.

Insolvency is an IRS protection mechanism some could benefit using in association with a short sale or foreclosure. Nonetheless you have got to make a very strong and correct paper trail.

If going into foreclosure, many will benefit by having a rating performed prior to the trustee sale.

If you are considering bankruptcy together with a foreclosure or short sale, ensure and work with a great bankruptcy solicitor and tax professional before doing anything. If you do things in the wrong order you may find yourself at risk.

If you have done a short sale and received a 1099 from the lender, don’t ignore it. Search for a qualified tax pro to insure it is reported properly to the IRS.

This is merely a short list of the many things that came up during the 1.5 hour panel debate. The base line reminder to us as Realtors is simple: Strongly advise our customers to find professional counsel. This has traditionally been our policy, yet it is great to be reminded.

You could be wondering how much consultation cost. We will not speak for all attorneys and tax professionals, yet Scott and Eric shared their fees with us.

Mack, Drucker and Watson will sit with you, go over your present position and offer options for a mere $250.00. The folds at Dobbins Fiscal will examine your circumstances and offer advice for $195.00. Therefore, for less than $500.00 you can be knowledgeable BEFORE making a decision. To us that's inexpensive insurance.

A Crucial NOTE: Quality guidance is the result of good information. Make sure you gather any and all loan documents and financial statements before meeting with your legal and tax counsel. We’ve read about people who neglected to mention they had refinanced their home or taken cash out in a home equity line and found themselves in dire straights later.

CONCLUSIONS ABOUT Looking for LEGAL AND TAX Advice Prior To A SHORT SALE OR FORECLOUSRE:

There is simply no way most householders can proceed with a short sale or foreclosure on there own. The IRS tax code is miles long and the legal side of the equation is a moving target based mostly on new rulings and changing laws. Your long term safely and contentment is worth about a hundred USD.

Phoenix Short Sales Expert focuses on Short Sales in the Phoenix AZ metro areas. Reasons for short sales include nominal credit damage, capability to get a future mortgage, employment factors, avoiding foreclosure and low tax liability. We will help you with your Short Sale today!Phoenix Short Sales Specialist 2 N Central Ave 720
Phoenix, AZ 85004
(480) 648-4929

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