Bank of America and rentals please help

[bellessima]

I really need some help with my rentals.

I have 2 in AZ and they cost me every month and they are worth 1/2 of what I paid for them.

I have 30 yr fixed with a second and HOA fees too.

I just cannot afford to keep paying. I have no other debt and I do not own a home. Just 3 rentals.

What happens with BA and taxes if I just walk away?

Thank you.
DB

[helpinNE]

Are these purchase money loans or have they been refinanced? If they are purchase money loans, AZ has a nonrecourse law which means you can pretty much walk away.
www.loansafe.org has some really good information on this topic and several walk away stories from AZ.

[bellessima]

Taxes and foreclosure

Are these purchase money loans or have they been refinanced? If they are purchase money loans, AZ has a nonrecourse law which means you can pretty much walk away.
www.loansafe.org has some really good information on this topic and several walk away stories from AZ.

I am not filing BK and am concerned about the tax issue.

Thanks

[badhouse]

If your loans are non-recourse loans you will not be hit with any federal taxes. I know AZ is a non-recourse state, but I am dubious that the non-recourse provisions of the law apply to investment properties. Seek legal counsel.

If your lender(s) do indeed have recourse you will be hit with a substantial tax bill. You will owe income tax on the difference between what you owe and what the properties sold for. You will not be exempt from taxation via the Mortgage Debt Forgiveness Act of 2007 because these homes are not your principle residence.

You can avoid taxes on these properties by filing for bankruptcy and including these properties before they get foreclosed on. If your mortgage balances and your tax brakets are high enough this alone might be sufficient reason to file for bankruptcy.

If you can prove to the IRS that you are insolvent without a bankruptcy filling, you can escape taxation to the extent of your insolvency. You will need a tax professional to help you with this.