But this post I want to bring to your attention – Home Sellers and the Tax Consequences of selling your home.
…”That’s because the tax is on the sale-purchase price difference – not on the sale proceeds – and the bankruptcy law makes it impossible to discharge anything owed to the government right away. “You have to wait two to three years after filing and not being able to pay your taxes to discharge them, so if you go bankrupt to discharge your other debts before then, you still owe Uncle Sam,” as Scott explains. ~~Gini Graham Scott, Author, Living In Limbo: From the End to New Beginnings~~
What does that mean? That means that if you sell your home in the early stages of foreclosure and use a bankruptcy filing to prolong the process, BEWARE and be sure to ask your attorney how much will your tax consequences be for taking that road. Find out if it will be better to stay in your home and ride it out.
Selling Your Home in the early stages of foreclosure could be a solution but make sure it won’t cost you an arm and a leg!