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Can I sell my house for less than its original purchase price and how will it impact my finances and credit score?
If you sell your house for less than you owe on the mortgage, you may need to pay the difference out of your own pocket.
For example, if you owe $140,000 and the home sells for $130,000, you'd need to pay the remaining $10,000 out of your own savings.
Your lender may agree to forgive the outstanding balance, but this could negatively impact your credit score and make it harder to buy a new home in the future.
A short sale may be an option, where your lender agrees to let you sell the home for less than what you owe, and they forgive the outstanding balance.
However, this can also damage your credit score and make it harder to buy a new home in the future.
If you have to sell your house for less than what you bought it for, you may need to pay capital gains tax on any profit made from the sale, depending on how long you've owned the property.
When you sell your home, the buyer's funds pay your mortgage lender and cover transaction costs.
The remaining amount is your profit, which can be used for anything, but many buyers use it as a down payment for their new home.
Your loan is repaid to your mortgage lender, and any remaining balance is paid to you.
If you sell your house for less than what you owe on the mortgage, you may need to pay the difference out of your own pocket.
For example, if you owe $150,000 and you sell the home for $140,000, you'd need to pay the lender a lump sum of $10,000 before the sale is final.
A short sale occurs when you sell your home for less than you owe on the mortgage and your lender forgives the outstanding balance instead of pursuing a foreclosure case.
You can sell your house and pay anything remaining directly to your lender, either out of pocket or using a personal loan.
The remaining balance is treated as ordinary income and is taxed as such, at a rate as high as 37% for short-term capital gains on assets held less than one year.
Long-term capital gains on assets held for more than one year are taxed at a lower rate.
You cannot take tax deductions when selling your house for less than what you owe on the mortgage.
Gains from the sale of a main home are taxed at a lower rate, with the first $250,000 of gain being excluded from income.
When you sell your house, any remaining balance is paid to your lender, and any remaining amount is paid to you.
Your lender may contact you to ensure you have a plan in place to pay the remaining balance if the sale price is less than what you owe on the mortgage.
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