djjkParticipant@djjkJoin Date: 2010Post Count: 87
I purchased property in Pennsylvania USA about 5 years ago. Turns out it was a poor decision – bought in a place that is very hard to sell the properties.
Anyway, I bought using vendor finance over there, paid a AUD 30k deposit (total purchase cost AUD100k) and that’s all I’ve paid since. The rent has basically covered the mortgage and other expenses but recently, I’ve been informed that there are substantial back taxes owing. In addition, there are supposedly, substantial improvements to the property and pay property taxes that aren’t covered by the rent.
I’m not able to make these payments and so the property will need to be transferred back to the seller. Its essentially a repossession. I’m fine with this – yes i’ll basically lose my deposit of 30k, but Im happy to be rid of the properties to be honest. Also, on the plus side, I can realise a substantial capital loss also am I right? I’ll get nothing for the sale of the houses – but I will generate a large capital loss (for the full 100k even though I’ve only paid 30k) which I can offset against cap gains in the future.
Am I correct that even though my cash outflay was only 30k, I can recognise the full 10k cap loss? Its reflecting the fact that im walking away from the mortgage and losing possession of the property.TerrywParticipant@terrywJoin Date: 2001Post Count: 16,190