Collection of Debt (COD) Income Planning
A distressed real property owner facing the prospect of foreclosure, short-sale or deed-in-lieu of foreclosure may be surprised to discover that these events can lead to income taxation of capital gain or cancellation of debt – ordinary income.
The real estate advisors at Zinner & Co. can proactively help owners deal with these issues. Factors that affect the tax results include:
- Property use
- Principal residence
- Investment property
- Real estate used in a business
- Entity structure
- Partnership or LLC
- Loan type
- Other business interests or unrelated tax issues
Careful planning is necessary because the character of income may differ. We can assist in projecting the tax implications of restructuring the debt and the ideal timing of specified events to minimize the tax in your particular situation.