I'm interested in giving my rental properties back to the bank because they are selling for less than I owe on them and the mortgages continually increase. I can't rent them for the amount of the increasing mortgage payments. Are there negative tax reprecussions?

Hello mik:

You are facing worse repercussions than that. In fact, I don't think there are ANY negative tax repercussions for losing money.

The repercussions you WILL face is a law suit or a lien on other properties you own, and VERY negative CREDIT repercussions.

You could attempt to arrange a "short sale" with your lenders. That's when you walk away scott free - at least from the lender. And, if this were your primary residence, you wouldn't have any negative tax repercussions. But, these aren't. If your bank DOES let you do a short sale, whatever amount the bank forgives, the government will consider income. So, there WILL be some negative tax consequences for THAT transaction. But, it's much better than than getting sued and blowing your credit.

excon

Why would the bank want them back if you can't sell them for what is owed ? And why is the amount going up, did you have a ARM, why not change them over to a fixed mortgage. And yes you may want to try and do a short sale, or you may end up getting foreclosed on.