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Unpaid debt
I am holding a private mortgage from the sale of some land. The mortgagor has stopped making payments. They have agreed to give back the property if I forgive the balance of the debt plus pay them $1k. Do I have to pay taxes on the unpaid balance of the loan.
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Run this by your accountant, but I don't see why you would have to. You didn't receive that amount.
Be careful about a deed in lieu of foreclosure. If someone acquired an interest in the property subsequent to your mortgage (such as a lien, etc.), you could wind up junior to that interest and would have to pay it off to regain clear title. |
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Why would you want to do this rather than foreclose? It may be cheaper for you, $1K vs lawyer fees for the foreclosure. But if you go for the foreclosure they will still owe the balance.
If you do this, make sure you do a title search and require a warranty deed. |
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