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Subject:  Re: Home sale selling price reduction issues Date:  8/19/2010  7:08 PM
Author:  jayob Number:  110916 of 128282

jayob: Fort whatever reason, you chose not to address wradicals's question . . .

Why are you accepting less?

"We sold our home in 2007 and carried back an interest only loan. The remaining principal was to be a lump sum payment in five years or less. The value of the home has dropped and we must agree to a reduced price. We paid tax on the portion of the gross profit that was covered by the down payment. Recalculating the profit with the new sale price results in no profit, so in retrospect, we paid unnecessary tax in 2007.

For example: The 2007 sale price was $910,000.
The basis was $350,000,including the cost of sale, thus our gain was $560,000.
The gross profit after the $500,000 exclusion was $60,000. The gross profit percentage calculates to be 6.6%.

We received a $250,000 down payment."

If you received a $250,000 down payment, has the home dropped in value by more than $250,000?

If not, why are you eating any of the loss in value?

Also, I assume arguendo that installment reporting was properly available in the year the sale closed.

Regards, JAFO

JAFO, Thank you for your concern. As wradicals said, "That's your call, but only if your primary reason is to get the cash earlier rather than later." And that is the situation. This has not finalized, and I am working very hard to avoid the scenario I described. However, it is worth $ to me to avoid the issues of foreclosure and regaining responsibility for the property. How much $ is it worth to me? not really known at this time. But, thanks to the real estate market here in California, the real value of the property has plummeted since the original deal was struck.

Again, thank you for your concern and warning. I do appreciate that.

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