Posted on 04/20/2007 6:27:01 AM PDT by RexTheRunt
This has happened before, in Houston in the 1980s and Boston in the early 1990s. People would take their checkbooks to real estate closings when they sold. Right now in California people are stuck in “interest only, negative equity” situations.
Hey Jeff, you did not loose $100,000. In order for one to loose something, one must have it first and you never had the $100,000.
If it will make you feel better, consider the $100,000 a STUPID tax.
Moron!
The fact that there are many, many people involved in these "creative financing" mortgages says a lot about the mentality of our country.
And that ain't no compliment.
No "may" about it if the lender does that, the debtor will receive a Form 1099 indicating that supposedly "phantom income". The lender, the debtor and the Feds all are on notice...
Buying a house on an interest-only mortgage could be one of the smartest financial moves you can make, depending on the rate.
I'd LOVE to make nothing but fully-deductible interest payments for 30 years and then have what amounts to a 250k balloon payment.
Assuming you could save the difference, you'd profit handsomely.
Another reason to home school! Sorry, couldn't help myself.
What I said was that the debt is only treated as income if it's forgiven. You can't owe it and also pay taxes on it.
Guess they learned the hard way not to buy a house together when the marriage is going south.
LOL!
well it sucks for people who have to sell early...the rule is ten years...if you make some profit earlier than that...great. But no one who bought during the previous “bubble” was out any cash ten years later.
This tries very hard to be an article about doom and gloom in the housing market.
Instead, what it really is is an article about why some people are really dumb.
“Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone. “
Forget the house for a second. This guy and his wife bought their “dream” but 8 months later they’re getting divorced. This is the problem, not the house.
I’m trying to think of the scenario where a married couple achieves their dream and immediately breaks up. I’d put $0.02 that the same have-it-all-now mentality extended to their daily lives, and that the tension of having to make the mortgage payment instead of daily lattes and lunches and dinners out and new cars every year was too great for them.
On a side note, $70k isn’t bad for working 9 months a year.
A lot of people only care, or can see, house eye candy. No different than the non working urbans putting $5,000 worth of rims and spinners on a Sentra.
Thanks to “creative” financing, this sort of stuff happens all the time, particularly in bubble markets, which is why I didn’t buy when I lived in one.... saw the folly that it was... of course everyone else just saw dollar signs of continued appreciation.... which in those situations is simply gambling.
This is really going to be a sticky wicket for gapp accounting. Is it or is it not income. I think that it must be treated as income but you should also get to deduct the loss (subject to the net 3,000 dollar a year capital loss with carry forward provisions and offset any capital gains from the stock market.) from your income as a capital asset loss sale.
I think all loan forgiveness must be taxable because if it were not, everyone would avoid income tax by "loaning" employees money and forgiving it. But if you buy a house and sell it at a loss, then you should be able to deduct the loss at a rate of 3,000 a year plus offset other capital gains from other sources like the stock market.
When Mrs. Wbill and I bought our house, we were preapproved for an absolutely ridculous amount of money. Something like 1/2 million dollars.
Could we have afforded the payments? Sure. But we would have had to dump both cars and walk everywhere, surviving only on Ramen Noodles. Nevermind paying the utilities.
I think that it's unfortunate so many people are so stupid to think that if they're approved to spend a ridiculous amount, it's OK to do. Just because you can, does not mean that you should.
I'm also completely unsympathetic to the couple that bought a house, then immediately got divorced. Either work it out, or don't write checks your butts can't cash. Realistically in this day and age, buying a home is a far bigger, and more difficult committment to get out of, than a marriage. I think that says something about our society, but I'm not sure exactly what.
/rant off
Youngstown is worse and Hoover is leaving town for Mexico.
please read my post 54
BUSH’S FAULT !!!
I can understand at least in theory the idea that an interest only loan allows you to invest the money you would be paying towards the principal elsewhere where you can earn a better return on that investment than the interest rate you are paying.
However, that only works if you are actually investing that money in sound investments rather than simply trying to live beyond your means.
Yeah the whole NE Ohio area started going downhill in the 70s (Kucinich et al) and never really changed course. With complete local govt control by liberal Dumbocrats, aided by inept state RINOs.
It was difficult to leave friends and family, but I certainly think my kids have better opportunities here in Indy.
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