ST Alpha - "I think the tax ramifications relate to the seller. If the bank forgives a portion of the loan, that 'can' be considered income." (Reading a Post)

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In response to "there seem to be potential tax ramifications and maybe legal... -- nm" by Beaker

I think the tax ramifications relate to the seller. If the bank forgives a portion of the loan, that 'can' be considered income.

Posted by MojaveMeg (aka Mojave) Mar 27 '11, 11:58

Should be a problem for the buyer.

Wasn't it Dougie that ran into a problem with the bank raising the price after he'd made an offer?

Responses:

So, if you buy a car and you get a 'rebate' for several thousand in the mail later, is that income? -- nm - zeitgeist Mar 27, 12:00 11
- you want theory or actually what happens? - tRuMaN Mar 27, 12:03 1
  - how about a free flight for your airline miles? stay a few nights and get a free night? -- nm - zeitgeist Mar 27, 12:08
- No, because that's a discount on the price of the car. The seller has reduced the price. But on a mortgage the bank is not the seller, they've only - MojaveMeg Mar 27, 12:03 5
  - its still a post sale negotiation wherein the value of the house re-appraised based on new information, conditions -- nm - zeitgeist Mar 27, 12:11
  - when you get a rebate on a car, you pay tax on the full amount, right? -- nm - amanda jones Mar 27, 12:06 3
    - Not sure - but if you do, that's sales tax not income tax. -- nm - MojaveMeg Mar 27, 12:09 2
      - right, that's my point. it's different taxation. -- nm - amanda jones Mar 27, 12:11 1
        
        and you're *paying* the full price -- you're just getting some back. -- nm - amanda jones Mar 27, 12:13
- I don't see why it would be considered income when they are just renegotiating the sale price which can happen in other contracts -- nm - zeitgeist Mar 27, 12:02 2
  - because it's reducing your existing obligation to pay the full amount of the mortgage -- nm - moles Mar 27, 12:13 1
    - I think I am actually ok with shortages being income. I don't think sellers should be able to walk away with no ... whatever. -- nm - amanda jones Mar 27, 12:14
OTOH, my friends are buying an avocado orchard via a short sale :) -- nm - MojaveMeg Mar 27, 11:59

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I think the tax ramifications relate to the seller. If the bank forgives a portion of the loan, that 'can' be considered income.

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