Tax or Real Estate Question??

Question

I recently asked this question.......read to the end for my new question.....

If I lose my home to Deed in leui of foreclosure, is there a chance I will owe tax on this as taxable income? If so, how do I know? What kind of percentage would I be looking at? The house is worth 92,000 and I owe 97,000. They are forgiving the entire debt. Any scenarios? Would I qualify for the mortgage forgiveness act? I paid 81,000 for it in 2004, I refinanced for 98,000 in 2007. I put about $15,000 of repairs into the home. It's my only home and have lived there since june of 2004.

I got some vague answers to that, but nobody told me a tax rate. What kind of taxes would I be responsible for? 5%, 10%, 40%? Also, on how much of the balance?

Answer 1

Sorry about the tax vagueness however,

...this might sound even more confusing.

A person's gross income is based on

the total number of hours worked in a given

period of time.  A person's tax obligation is

based on the same principle; the total

taxes owed during a period of time.

Taxes owed to the fed are usually based

on an annual "accounting" and thus,

specific acts committed during a taxable

year do not demonstrate the specific

amount of taxes due the following year

on one's activities UNTIL ALL THE ACTIVITIES which are taxable are

ACCOUNTED FOR.

Remember this--all loses, gains,

tax shelters, dependencies, and the

like [plus carry forwards] all count within

the math matrix of one's tax obligations.

I know you have heard of major corporations earning a gross of x dollars;

like 100 billion yet they pay no income taxes.

They don't owe any because of the other

activities they are involved in; tax shelters,

depreciation, etc.

The same with you.

WHEN i taught accounting [and still teach investing] ages ago, I reminded all my students to think of this;

start off each year and think continuously

when handling investments;

'WHAT MUST i DO TO HAVE no

tax obligation by the end of the year?"

Thus, 99% of the populace are asking

the wrong things; "what do I owe?"

THEY should ask, 'what can I do

to owe nothing?"  Legally!

IF you do the Less efficient things,

YOU WILL have a [large?] tax obligation.

If you do more efficient things, you

can legally have no tax obligation.

Such things as some real estate investing

shelters $, all small business startups

are tax shelters, and more!

does that help?

[do your best to keep your house!

work 2-3 jobs to keep it; cause it will

rise in value in 2-3 yrs again!]