I had to buy a second home for my sister under my name because she did not qualify for a mortgage at the time. My sister is considering a deed in lieu for her house that is under my name. I understand the mortgage forgiveness debt relief act only applies to primary homes (I am also foreclosing on my primary house). Will there be tax consequences that I will have to pay for on my second home? or can I explain to the IRS that the house was technically not mine. The title is under both our names but only the mortgage is under my name.
I don’t think second home qualify under mortgage forgiveness debt relief. Not under this provision. Only canceled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion.
on Jul 23rd, 2009 at 9:44 am
Sorry, but it sounds like you are out of luck. Retain a good Real Estate Attorney to try to fix the situation for yourself, but I would caution against doing anything, including allowing your sister to do a deed in lieu, without consulding a Real Estate Attorney.
Good luck
References :
Eau Claire, WI Realtor
on Jul 23rd, 2009 at 10:26 am
No. Only primary home is eligible.
References :
on Jul 23rd, 2009 at 10:40 am
I don’t think second home qualify under mortgage forgiveness debt relief. Not under this provision. Only canceled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion.
References :
http://www.instantdebteliminator.com