What is a 1099-C?
Video Summary
What is a 1099-C? It’s an IRS form which is completed by a lender whenever they forgive debt of a borrower. Usually, a 1099-C is issued whenever you have a short sale, meaning that you sell the property for less than the amount of money owed. The difference, if the lender forgives it, is shown on the 1099-C, which is reported through the Internal Revenue Service as income. And if you receive a 1099-C, you need to contact a knowledgeable certified public accountant. You will not necessarily have to pay taxes, and you will be able to subtract your basis if it’s investment property from whatever gain the lender has reported under the 1099-C.
If it has to do with your primary residence, and you get a 1099-C, you may not have to pay any tax likewise, and as an individual you can exempt up to $250,000.00 of gain as far as the sale of your home if you’ve lived in the home for two out of the past five years. Also, if it was the original mortgage and you did a short sale there’s some federal legislation that may also excuse the issuance of a 1099-C. I would also add that many times on a short sale, the lenders don’t necessarily issue 1099-Cs. So if you do get a 1099-C, I suggest that you consult with a knowledgeable certified public accountant and ask them how much you’re going to have to pay or recognize as income.
And if you have any other questions about 1099-C, give me a call at 847-2288. Thank you.
Do I Need a Living Will?
Video Summary
Do I need a living will? I suggest that you go ahead and get a living will. They are not very expensive. It is also called a declaration wherein you state in writing that you do not want your life prolonged in the event that you have a terminal condition, end-state condition or permanent vegetative state and you direct and authorize life support to be discontinued.
There was a case several years ago called the Schaivo case where someone was left on life support for years and years and years. She did not have a living will, and she made an oral declaration saying that she did not want to be put on life support. The family as well as the husband spent over $1 million on attorney fees litigating the issue as to whether or not life support should be discontinued. Eventually, life support was discontinued.
With a living will, it does not keep you off of life support in the event that 911 is called. Even if you have a living will, they will come, revive you and take you to the nearest emergency room. If you’ve lost consciousness or whatever the situation is, they will wait to stabilize you. Once you’re stabilized, they will evaluate you to determine whether you’re in a permanent vegetative state, whether you’ve got any other complications. And then once they make that evaluation then they’re authorized to contact whoever the healthcare surrogate is, a person you designate in your living will, as to whether or not you’re authorized to disconnect life support. And then that person would then authorize the discontinuance of life support pursuant to your written instructions.
Many people say, “Well, I don’t want to be put on life support.” There is a form called a “Do not resuscitate,” which is a DNR form; however, you have to be under a doctor’s care, and it’s usually whenever you’re in hospice and posted on a colored form over your hospital bed whenever you’re in hospice or in the hospital. And if you do have a “Do not resuscitate,” and you go into a coronary arrest or some other life-threatening situation, they will not call in 911 or administer emergency care. So it’s my suggestion, just as a precautionary measure – no one usually wants to be sustained if you’re in a permanent vegetative state – to have a living will so your loved ones will not be burdened with that problem if you’re never going to reach consciousness again and they have to support you in an assisted living facility or in a hospital.
So I suggest you do have a living will. If you have any questions, give me a call at 727-847-2288.
- Published in Estate Planning, Videos
What is a Tax-Deferred Exchange?
Video Summary
What is a tax-deferred exchange? A tax-deferred exchange is also called a 1031 tax-deferred exchange, and 1031 is a section of the Internal Revenue Service that identifies investment property. The exchange aspect of it is if you exchange one piece of property of equal or greater value than the value of the property that you have, you don’t have to recognize any gain. You cannot accept any boot, and the amount of the liens or encumbrances on the property have to be equal or you have to have less equity in your property than the property that you’re acquiring as well as the purchase price being higher.
Now, the Internal Revenue Service has promulgated various regulations and rules as to how you can sell your property, and if you deposit the money with what they call an intermediary, you can then have a certain time period to select the property and you can select up to three properties and close on them within a six-month period. There are also other provisions as far as you can select as many as ten properties, but there are specific rules that you must follow in order to take advantage of a tax-deferred exchange.
If you have any questions about handling a 1031 tax-deferred exchange, give me a call at 727-847-2288. I’ll be happy to assist you. Thank you.
- Published in Real Estate, Videos
Should I Have a Revocable Trust?
Video Summary
Should I have a revocable trust? Well, many people contact me and ask about having a revocable trust prepared, and I always ask them, “Why do you want a trust?” And the usual answer is, “Well, we wish to avoid probate.” If you have a functional family wherein you’re still on your first marriage and you want your inheritance to simply go to your children, then I don’t usually recommend a revocable trust for the purposes of avoiding probate, since if you hold property as husband and wife then you avoid probate when the first person passes away. If you’re by yourself, however, then you may want to consider drafting a revocable trust.
There are also other circumstances such as second marriages or if you have a child that has special needs that you need to set up a trust for. Also, if you have a child that has a spending problem, cannot manage money, we can set up a trust to protect whatever inheritance you leave behind. Also, something that we’re seeing more and more is grandparents want to provide for their grandchildren. Possibly their children already have enough money or they want to take care of their grandchildren, since they don’t know whether their children will be able to take care of the education of their grandchildren. So there are any number of reasons to set up a revocable trust.
Whether you need a trust or not, or whether you should set one up depends upon your circumstances. So if you’d like to come in and talk about setting up a revocable trust, give me a call at 727-847-2288. Thank you.
What Should I Do if I’m in Danger of Foreclosure?
Video Summary
What’s the first thing you should do if your property’s going to go into foreclosure? Well, the first thing that I suggest you do is contact an attorney who specializes in foreclosure defense. He should be able to tell you the foreclosure process and tell you what your potential liability is for the bank coming after your other assets. Also, he can give you some idea as to how long it will take the bank to foreclose on your property, give you some kind of timeline.
You also have various options, one of which is to try and do a mortgage modification, which many people try and do before they ever contact an attorney and come in very, very frustrated. But my suggestion to you is to continue to send to the lender your financial information in order to try and do a mortgage modification. I will say that the lenders have not, in my experience, reduced your principal amount. What they try and do if they do a modification is to reduce the amount of your monthly payment rather than your principal balance. Depending on who your lender is and who the owner of your loan is, you may or may not be successful.
One of the other options is a deed in lieu of foreclosure. Chase Bank does have a program – it’s called Cash for Keys – where they may agree to give you relocation money if you deed your property over to them rather than them having to go through a foreclosure action. That program was available several months ago. I haven’t seen too much activity lately, but I know that Chase did have that program. It’s a problem if you have a second mortgage because you have to be able to transfer your property to them without a second mortgage.
The other process or option you have, which the banks really encourage, is to do a short sale, meaning that you sell the property to someone for less than the amount of money that is owed and then negotiate with the lender as to whether or not they’ll approve the sale and agree to release you from any responsibility for the remaining money that’s owed under your loan. The problem with a short sale is, you need to have some place to move once you sell your property because when you sell it – well, you no longer have a house. And so, that is something you must consider.
So, I suggest you contact a knowledgeable foreclosure defense lawyer and he will explain your various options, what your timeline is and even answer your questions as to whether or not bankruptcy is an option. If you have any more questions, give me a call and I’ll be glad to try and answer them for you. The number is (727) 847-2288.
- Published in Real Estate - Foreclosure, Videos