 Remember last month when I talked about how you may owe taxes after a short sale on your personal residence? The same problem may happen if you have an investment property with problems. Depending on your situation, especially how much you owe on your property and to whom, you may have a huge tax problem on your hands. Plenty of help for a primary residence Over the past few years, there have been a number of new laws and government programs set up to help homeowers. For example, the Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief, and these advantages will be in place until 2012. Also, as the economy continues to be rough for the average taxpayer, there will be continued political pressure to provide relief in the form of tax breaks and rule changes. Why investment properties are different To put it simply, an investment property is not a primary residence, so many of the breaks that homeowners get when it comes to tax breaks for forgiven debt doesn't exist. For example, if you are personally insolvent on the day that you do a short sale on a personal residence, you probably don't owe any taxes on the value of the forgiven debt. If the same thing happens with an investment property, it isn't a personal residence, and you may owe on the forgiven debt. Nightmare scenario: you lost money but still owe taxes There are many ways that this can happen, and the following is an easy to follow example. An investor bought a four-unit apartment house for 0% down three years ago, and the rent from the tenants easily covered the mortgages and other costs. In the last year, two very bad things happened - real estate prices dropped 30%, three of the tenants moved out or just stopped paying rent, and you are bleeding money like crazy. You find another investor who takes it off your hands, and you think you are lucky because the mortgage holder allowed a short sale on your property. Things look great until a few months later when you get the 1099C from the mortgage holder and you realize that the forgiven debt is considered income, and you owe taxes on the difference between the purchase price and the sale price. The only problem is your apartment house was your only significant investment, and after you sold it and took care of all the other costs, you were living paycheck to paycheck. You have a tax bill that is is equal to your annual income, and Uncle Sam doesn't want a sad story, he wants you to show him the money. How to deal with this problem The best way to deal with the problem is to avoid it by not selling the property. If this is not an option, then it is time to get either creative or proactive. Creative would be working with the mortgage holder to change the terms of the deal, or working with real estate management company to find paying tenants. If you have no choice but to sell, then at least prepare for the consequences by contacting the IRS about your situation. They will still want their money, but they may be open to negotiating a payment agreement with you. Short sellers, who get lenders to forgive a portion of the debt in order to complete a sale, are also at risk because lenders will often leave their options open to come back and collect later. If you are involved in a short sale, make sure to review your agreements carefully, preferably with the help of a competent professional. Photo credit: Wikipedia  |
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Short Sale on Your Income Property? - You May Owe the IRS Big Time
Repair Your Bad Credit Score And Credit History By Having Cash On Hand
By Alex Strobel
A bad credit score can come from unforeseeable circumstances, like a medical emergency or car trouble, but typically, those who are in a great amount of debt and have received a bad credit score as a result have poor financial habits and live outside of their means.
Having cash on hand for big purchases is an old world habit that is rarely practiced today, as many feel it is their right to have the best and most lavish material possessions. While there is nothing wrong with a big house and a nice car, buying things that are outside of your price range is going to always lead to financial trouble.
The vast majority of people that want a home or a car will not save up the money to buy these things, but would rather take a loan that will cost more over time, with interest factored in. Oddly enough, a home loan payment and a car payment usually don’t turn a good credit score bad, as these bills are usually paid first.
Constantly buying unnecessary items on credit causes debt to pile up and, again when interest is factored in, you are going to find yourself behind an almost insurmountable mountain of debt.
By using the simple practices of budgeting, saving, and even sacrificing you can get out of debt and stay out of debt all while raising your credit score. If you use credit to buy non-necessities you are in the position to improve your credit history. However, before you buy something that isn’t vital, like food, water or shelter, you need to make a monthly or weekly budget and save up the money before making the purchase.
You can make the purchase on credit, having the money on hand, and then when your credit card bill comes, pay off the charge with the money that was saved. Simple practices like this will go a long way helping you not only stay out of debt, but it can improve your bad credit score over time.
SOURCE : www.rwbpress.com
A bad credit score can come from unforeseeable circumstances, like a medical emergency or car trouble, but typically, those who are in a great amount of debt and have received a bad credit score as a result have poor financial habits and live outside of their means.
Having cash on hand for big purchases is an old world habit that is rarely practiced today, as many feel it is their right to have the best and most lavish material possessions. While there is nothing wrong with a big house and a nice car, buying things that are outside of your price range is going to always lead to financial trouble.
The vast majority of people that want a home or a car will not save up the money to buy these things, but would rather take a loan that will cost more over time, with interest factored in. Oddly enough, a home loan payment and a car payment usually don’t turn a good credit score bad, as these bills are usually paid first.
Constantly buying unnecessary items on credit causes debt to pile up and, again when interest is factored in, you are going to find yourself behind an almost insurmountable mountain of debt.
By using the simple practices of budgeting, saving, and even sacrificing you can get out of debt and stay out of debt all while raising your credit score. If you use credit to buy non-necessities you are in the position to improve your credit history. However, before you buy something that isn’t vital, like food, water or shelter, you need to make a monthly or weekly budget and save up the money before making the purchase.
You can make the purchase on credit, having the money on hand, and then when your credit card bill comes, pay off the charge with the money that was saved. Simple practices like this will go a long way helping you not only stay out of debt, but it can improve your bad credit score over time.
SOURCE : www.rwbpress.com
Credit Repair 101 - Beware of scams
by William E. Lewis Jr.,
While the economy has been showing some signs of improvement, your good name and reputation is becoming more important within the community. Creditors have tightened their guidelines effectively barring millions of Americans from borrowing money. Even those with high credit scores have experienced closed credit card accounts and equity lines. When an account has not been closed, credit limits have been reduced to the current balance due.
Mortgage lenders, auto finance companies, credit card issuers and banks have all raised the bar. Borrowers with low FICO scores can expect to be denied or to pay significantly higher interest rates than those with excellent histories. Long gone are the days of obtaining credit, goods, benefits, services and/or employment with a 620 score. In more instances than not, a consumer will be denied if they maintain a credit score lower than 740.
The terms credit repair, credit restoration or credit rehabilitation are somewhat synonymous. Those with bad histories cannot afford to ignore the potential benefits of credit repair. In today's economy, a strong FICO score is more important than ever. Approximately 78 percent of credit profiles in the United States contain some sort of error or omission materially impacting credit worthiness. Absent self-help and the "do-it-yourself" approach, a consumer may hire a credit service organization (CSO) in the restoration of their good name and reputation within the community.
Most - but not all - CSOs specialize in the restoration of consumer credit worthiness as well as issues related to identity theft. Assuming that said organization is performing within the law, they utilize laws enacted by Congress to dispute negative, erroneous, obsolete, and/or fraudulent information contained within your consumer credit profile.
Utilizing the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Fair Credit Billing Act, and the Fair and Accurate Credit Transactions Act, a reputable CSO will assist a consumer in the submission of disputes electronically, verbally and in writing to the Equifax, Experian and Trans Union consumer reporting agencies in addition to creditors, collection agencies, third-party record providers and state, federal, local, or private regulatory authorities.
Keep in mind that anything a CSO can do, you can do yourself for little to no cost. With that said, a reputable organization should have the edge as they will possess the education, knowledge and a source proven method that is generally unknown to the average consumer. Unlike most credit repair clinics that submit the same written dispute letters monthly, a reputable CSO will have devised a strategy whereby disputes are submitted electronically, verbally and in writing over a long period of time to the credit reporting agencies, creditors, collectors, and third-party record providers reporting negative, inaccurate, obsolete and/or erroneous information.
A reputable CSO should have a provable track record of results as well as the ability to modify and/or remove erroneous or inaccurate judgments, liens, foreclosures, bankruptcies, short-sales, student loans, inquiries, derogatory tradelines, personal identifiers and other transient data from a consumer's credit report. Although the credit restoration process can take anywhere from 30 days to six months, most individuals should see some results within the first 45 to 60 days.
Credit repair, credit restoration and/or credit rehabilitation is as legal as pleading "not guilty" in a court of law. With that said, one must understand that most CSOs are not law firms and that their employees are not licensed to practice law. As such, even a reputable CSO cannot provide legal advice nor represent a consumer before any court or in any legal proceeding. In the event that legal representation is required, said organization should provide an appropriate attorney referral for consultation.
When self-help or the "do-it-yourself" approach is not feasible and you decide to hire a CSO to restore your credit, be sure to check them out. While the majority of credit repair clinics are scams, a few good ones do exist. Consumers can check out a credit repair clinic through their state Attorney General - www.MyFloridaLegal.com in Florida - or through the Better Business Bureau at www.BBB.org
SOURCE : www2.highlandstoday.com
While the economy has been showing some signs of improvement, your good name and reputation is becoming more important within the community. Creditors have tightened their guidelines effectively barring millions of Americans from borrowing money. Even those with high credit scores have experienced closed credit card accounts and equity lines. When an account has not been closed, credit limits have been reduced to the current balance due.
Mortgage lenders, auto finance companies, credit card issuers and banks have all raised the bar. Borrowers with low FICO scores can expect to be denied or to pay significantly higher interest rates than those with excellent histories. Long gone are the days of obtaining credit, goods, benefits, services and/or employment with a 620 score. In more instances than not, a consumer will be denied if they maintain a credit score lower than 740.
The terms credit repair, credit restoration or credit rehabilitation are somewhat synonymous. Those with bad histories cannot afford to ignore the potential benefits of credit repair. In today's economy, a strong FICO score is more important than ever. Approximately 78 percent of credit profiles in the United States contain some sort of error or omission materially impacting credit worthiness. Absent self-help and the "do-it-yourself" approach, a consumer may hire a credit service organization (CSO) in the restoration of their good name and reputation within the community.
Most - but not all - CSOs specialize in the restoration of consumer credit worthiness as well as issues related to identity theft. Assuming that said organization is performing within the law, they utilize laws enacted by Congress to dispute negative, erroneous, obsolete, and/or fraudulent information contained within your consumer credit profile.
Utilizing the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Fair Credit Billing Act, and the Fair and Accurate Credit Transactions Act, a reputable CSO will assist a consumer in the submission of disputes electronically, verbally and in writing to the Equifax, Experian and Trans Union consumer reporting agencies in addition to creditors, collection agencies, third-party record providers and state, federal, local, or private regulatory authorities.
Keep in mind that anything a CSO can do, you can do yourself for little to no cost. With that said, a reputable organization should have the edge as they will possess the education, knowledge and a source proven method that is generally unknown to the average consumer. Unlike most credit repair clinics that submit the same written dispute letters monthly, a reputable CSO will have devised a strategy whereby disputes are submitted electronically, verbally and in writing over a long period of time to the credit reporting agencies, creditors, collectors, and third-party record providers reporting negative, inaccurate, obsolete and/or erroneous information.
A reputable CSO should have a provable track record of results as well as the ability to modify and/or remove erroneous or inaccurate judgments, liens, foreclosures, bankruptcies, short-sales, student loans, inquiries, derogatory tradelines, personal identifiers and other transient data from a consumer's credit report. Although the credit restoration process can take anywhere from 30 days to six months, most individuals should see some results within the first 45 to 60 days.
Credit repair, credit restoration and/or credit rehabilitation is as legal as pleading "not guilty" in a court of law. With that said, one must understand that most CSOs are not law firms and that their employees are not licensed to practice law. As such, even a reputable CSO cannot provide legal advice nor represent a consumer before any court or in any legal proceeding. In the event that legal representation is required, said organization should provide an appropriate attorney referral for consultation.
When self-help or the "do-it-yourself" approach is not feasible and you decide to hire a CSO to restore your credit, be sure to check them out. While the majority of credit repair clinics are scams, a few good ones do exist. Consumers can check out a credit repair clinic through their state Attorney General - www.MyFloridaLegal.com in Florida - or through the Better Business Bureau at www.BBB.org
SOURCE : www2.highlandstoday.com
Developing A Good Credit History Early In Life Can Help Avoid A Bad Credit Score
By Steven Craig
People that are just beginning to build a credit history come in different stages of life and having little or no credit history isn’t just something that is applied to young men and women. Buying on and paying off credit, paying off loans and other forms of debt payment all reflect well on your credit history, which brings about high credit score.
However, bad credit often follows people around throughout life and while there are ways to repair bad credit, getting off on the right financial foot is going to be key to not only avoiding bad credit, but maintaining habits that are conducive to good credit.
Buying on credit can be the beginning of trouble for many, but it is vital to building a good credit history. However, one good rule to buying on credit is to have the cash for the purchase on hand. This is counter to the whole point of buying on credit in many people’s minds, but credit card companies hope you don’t have the money to pay off your balance so that interest charges will pile up and they make more money.
While there are emergencies that require the use of a credit card at times, if you are looking to buy something particular and not necessarily vital, make sure you have the money on hand or in a savings account, ready to go when your credit card bill comes due.
By practicing small, common sense actions with credit cards, you will not only be able to build a good credit history, but also avoid a bad credit score.
SOURCE : www.rwbpress.com
People that are just beginning to build a credit history come in different stages of life and having little or no credit history isn’t just something that is applied to young men and women. Buying on and paying off credit, paying off loans and other forms of debt payment all reflect well on your credit history, which brings about high credit score.
However, bad credit often follows people around throughout life and while there are ways to repair bad credit, getting off on the right financial foot is going to be key to not only avoiding bad credit, but maintaining habits that are conducive to good credit.
Buying on credit can be the beginning of trouble for many, but it is vital to building a good credit history. However, one good rule to buying on credit is to have the cash for the purchase on hand. This is counter to the whole point of buying on credit in many people’s minds, but credit card companies hope you don’t have the money to pay off your balance so that interest charges will pile up and they make more money.
While there are emergencies that require the use of a credit card at times, if you are looking to buy something particular and not necessarily vital, make sure you have the money on hand or in a savings account, ready to go when your credit card bill comes due.
By practicing small, common sense actions with credit cards, you will not only be able to build a good credit history, but also avoid a bad credit score.
SOURCE : www.rwbpress.com
Homeowners DIY ‘to save money’ this Easter and other holidays
Many homeowners are to do their own household maintenance, or DIY, over the Easter holiday - possibly to save money - a study has suggested.
Research carried out by Churchill Home Insurance revealed that more than one in four householders are planning to do their maintenance rather than pay a professional to perform the duties for them.
It means that over a quarter of a million homes will be painting, decorating and renovating over the bank holiday period.
The survey disclosed that more men are set to pick up a hammer or paintbrush than women over the weekend, with Northern Ireland having the most DIY fans with nearly half of those quizzed reporting that they aim to do some work.
Residents from the East Midlands, however, plan to do the least.
Statistics recently released by uSwitch.com showed that around 5.5 million households - 21 per cent of the nation - are now in debt to energy suppliers after the coldest winter in 30 years.
SOURCE : www.abacusfinance.co.uk
Article By Joe Shervin
Research carried out by Churchill Home Insurance revealed that more than one in four householders are planning to do their maintenance rather than pay a professional to perform the duties for them.
It means that over a quarter of a million homes will be painting, decorating and renovating over the bank holiday period.
The survey disclosed that more men are set to pick up a hammer or paintbrush than women over the weekend, with Northern Ireland having the most DIY fans with nearly half of those quizzed reporting that they aim to do some work.
Residents from the East Midlands, however, plan to do the least.
Statistics recently released by uSwitch.com showed that around 5.5 million households - 21 per cent of the nation - are now in debt to energy suppliers after the coldest winter in 30 years.
SOURCE : www.abacusfinance.co.uk
Article By Joe Shervin
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