Dec. 7, 2009
Dear George: I'm selling my house as a "short sale." How will this affect my purchase of another house?
Answer: A short sale avoids foreclosure, but it also negatively affects your credit score, lowering it by as many as 200 points. However, this hit to your credit score can be overcome more easily than the black mark a foreclosure leaves on your credit report—especially if you retain one or two credit cards and keep them current. The IRS used to consider the difference between the mortgage balance and the amount realized from the short sale to be taxable income. This rule was changed by the Mortgage Forgiveness Debt Relief Act of 2007; see Publication 4681 for ruling limitations and restrictions.
Dear George: My landlord agreed to sell me the house that I've been renting from him. The house is in his mother's name, but she died nine years ago with my landlord as her sole heir. He has an IRS lien for unpaid taxes that will attach to the house as soon as the landlord puts it in his name. Is there any way for me to buy the house from the estate?
Answer: Yes. If your landlord hasn't taken ownership of the house (i.e., it's still owned by the estate of your landlord's mother), you can buy the property from the estate. That way, the tax lien never attaches to the property.
E-mail a question to ask George & Chuck or fax it to 713-978-6684. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.
