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Welcome back to the velocity of money, this is Michael J Barnes and you are listening to the velocity of money on KFNX 1100AM Arizona’s news talk leader.
You can also listen on the web at www.1100KFNX.com.
Welcome back, we know you are all trying to get ready for Thanksgiving, but we’re going to talk about some very important stuff in regard to taxes and real estate and some the pitfalls of so many Americans are facing.
But before we roll right into that with Mike Patenella , and Brett I wanted to mention if you need help with the mortgage that you have, if you have questions about loan modification, whether you’re a candidate for it, or you just have questions call the office at 480 velocity and we will get your information and we’ll send a copy of the DVD that we have put together for you or if you just want to talk about it and ask some questions, that is what myself personally and my staff are there for.
In addition to any other mortgage needs that you have.
So we talked about 20 million homeowners are upside down, on their mortgages thousands of their homes are being foreclosed on every week property values may still be declining in some areas.
Homeowners are walking away they are doing foreclosures, there is a deed in lieu, that people may not be aware of, loan modifications in many different shapes, forms and fashions and short sales.
These are all things that do have tax implications that a lot of people are not aware of.
Each has its own consequences that is why we have as Mike Patenella.
A CPA to be with us today on the air, really with Mike tells a little bit about yourself.
Well I am a CPA.
I have been in public accounting in 1988, I have my own tax practice and operate out of Scottsdale, and we focus on tax-preparation advance planning for high net worth individuals and small businesses throughout the Valley So since 1988 here in the Valley? No, I’ve moved to the Valley in 1990 back from New York Very nice the accent sounds like it may be gone Well, you work hard at it You know, I have had the opportunity to work with Mike as a strategic partner as well and I share a number of clients.
Each time I have had the honor of providing him a referral for tax work.
The outcome has exceeded expectations, so I am really pleased to be part of the discussions today and to work with such a great group It has been a pleasure and again, if you’re talking about, that strategic partnership, the financial power team as our good friend Dan Havey likes to call it, the outcome is important but when a client calls you up or a homeowner calls you up and says thank you so much for sending me to Brett or Mike, what a great job, wow.
That is the greatest again Mike that’s why you are here with us today So we should probably dive right in.
I know we’ve been talking a lot the last few weeks about loan modifications and how Velocrity Financial can help in that regard.
But, help me even for my financial planning perspective what are some of the implications of taking this approach.
For example how does the IRS look at people who don’t pay back their debt? Well they do have a record of who does not pay back their debt because the banks have to send a form of 1099C to anyone who gets any debt forgiven and what that does is it lists how much debt you are able to walk away from.
And the reason they want to track that is unless you qualify under certain exclusions that is taxable income to you A question for you on that and I honestly don’t for sure know for sure the answer to this so let’s use a simple scenario my favorite one is a guy owes $400,000 on his house and he does a short sale for $300,000 laymen would think that there is going to be $100,000 if he is going to get a 1099C for a 1099C form from the lender that they did not pay the moneys back for.
What about the other cost the lender incurred? For instance even though they sold it for $300,000 there are still real estate commissions title deeds all kinds of closing cost and things like that, and that the lender loses below that 300.
Do you know if that is included? Yes that would be almost like lending you additional money to cover these costs So in other words if I owe 400,000 and sell it for 300,000 in a short sale the bank is going to spend $112,000 I saw in a report today you are getting a 1099C for that right? In that example yes The foreclosure cost I just read today, the average foreclosure cost is $112,000 average cost that’s legal fees carrying cost all these different things.
That is a lot of 1099C income
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