(PRWEB) January 29, 2008
Davie, FL Maverick Investor reveals silent pact between bankers and taxman could cost you your home and bury you under a mountain of debt, while lining the bank's already massive profits and increasing the revenue of the IRS.
Real Estate Investing has never been more hazardous to the financial well being of investors. Your Banker and the Taxman have taken a vow of silence that threatens to wipe out the real estate portfolios of many investors who are faced with foreclosures.
Real estate sales have dropped by 13.8% in 2007. The sub prime debacle has cost an estimated $300 billion with no sign of stopping.
The median home price in a six-county region of Southern California plunged more than 13 percent in December from the same month a year ago, as the national housing slump kept eating away at home values.
All this puts pressure on real estate investors who may have taken advantage of low "teaser" rates, cash-out refinancings, zero-down loans, 'negative amortization loans', and other 'creative' financing options.
The national foreclosure rate has skyrocketed. The country is so close to recession that the Federal Reserve recently slashed interest rates in a vain hope to stem the tide.
So what do you do when the buyers disappear, prices plummet, rates shoot up, and you can't afford the mortgage? According to Vince at Madnox Corp., many people walk away from their properties and let the bank 'fix' it. Pro-active property owners try to renegotiate with the lender, often turning over the property to the bank in exchange for the bank forgiving the outstanding loan.
"Both options can put you into debt, foreclosure, bankruptcy or even worse," says Vince. "The first thing I counsel my clients, is that you did what you thought was best for your future and the future of your family. It did not work out, but beating yourself up about it won't help. We need to recognize where we are and move from there."
Unfortunately, according to Vince, being proactive can almost be worse than doing nothing.
Often when a property owner faces foreclosure, he will negotiate with his banker to give up his house along with a cancellation of debt. So if the bank sells a house with a $200,000 mortgage for $150,000, the owner does not owe the bank the outstanding $50,000. The bank cancels the debt and writes it off against profits.
Sounds like a great deal to the poor distressed owner. Until a few months later when the IRS informs him that that $50,000 debt he did not have to pay the bank is considered taxable income. In effect, his income went from a national average $45,000 to $95,000 and he never saw the money.
This is outrageous, according to Vince. Your banker quietly crosses his fingers hoping you will sign his forms, knowing full well you will be stuck with an onerous debt you may never repay. And since you now owe the IRS, not the lender, bankruptcy is no longer an option.
The problem, says Vince, is that your Banker and the Taxman know the rules of the game but most investors and home owners don't. He has spent the past three years developing accounting strategies that allow investors to structure their real estate assets so that the outstanding $50,000 debt becomes an expense for income tax purposes, not income.
Vince's word? If one starts falling behind in mortgage payments, don't wait to get help. There are many competent professionals who can give solid advice and recommendations. Learn the rules of the game and put in place strategies to keep the bankers and taxman at bay.
Madnox is a rough diamond company that specializes in rough diamond trade available exclusively at http://www.madnox.com
6700 Griffin Road Suite G
Davie, Florida 33314
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