Tax Write Off for being Forclosed on?

- M
- Matt
  
  Contact options for registered users
posted
18 years ago

Wed, Dec 21, 2005 9:15 PM

I own land in South Carolina. This year a portion of it was foreclosed on because, well, I didn't make the payment. The value of the note was around 85K and the bank sold it to themselves for around 40K. They then sent me a bill for 45K which I am paying, interest free, for the next 5 years. Oh joy.

Anyway, what I'm wondering is if there is any way for me to write this

45K off. My accountant says there isn't, but he's the most conservative man on the planet. I'm looking for any ideas or suggestions. I'm not thinking of shady deals here, just ways for me to get some kind of credit for this $800 payment I'm making to the bank every month. Business loss?

Any suggestions would be welcome.

By the way, I am a sole proprietor. I'm assuming I could have done different things if I was a corp. Also, I'd like to be clear. I got nothing from the project. The bank sold it to themselves and took all of the land back. I got a 45K debt with nothing to show for it. Actually a 45K loss in my opinion. But, I'm not an accountant and I know all of you guys think a little differently than the average joe. :-) Right?

Thanks in advance.

Matt

- P
- Paul A. Thomas
  
  Contact options for registered users
Vote on answer
posted
18 years ago

Wed, Dec 21, 2005 9:38 PM

"Matt" wrote

Are you in the business of buying and selling land? If so, then it may fly.

Otherwise, what was this land, exactly? If it was held for investment purposes, then you ~may~ have an investment loss.

What business purpose did this land serve?

- M
- Matt
  
  Contact options for registered users
Vote on answer
posted
18 years ago

Thu, Dec 22, 2005 5:54 AM

I had 2 projects. They were each cut up into multiple lots and I was acting as the bank for people who wanted to buy a lot to build or put a mobile home on. I would mortgage the land for 20 years and they would make payments to me as if I was the bank. The first project went great. Started paying for itself before the 1st year of interest only loan. The 2nd project never got off the ground and the land seller (who sold it to me) put a 6 month guarantee on the project, but never came through for me. 4 years later the bank finally forclosed on that 2nd project in the manner described above. So the idea was to have enough land purchasers who make monthly payments to me to pay for the land, but they never found enough sellers and in the end the bank forclosed on the project.

Is that enough information?

I still own the other project and it pays for itself, most of the time. I sometimes have some issues with collections. If I could sell the remaining lots on the 1st project for cash, I could pay off all the debt I have on both projects, including the 45K that I'm getting nothing for.

Matt