Selling my house after foreclosure

[spitfire]

I live in Michigan and filed for Chapter 7 in July 2009 after having my house sold at the Sheriff's Sale in May 2009. I had planned to walk away from the house after the redemption period. However, a few weeks ago I found out that the house sold for a low price at the Sheriff's sale and I have a friend who wants to buy it from me at a greater price. I am assuming that my bankrupcy will discharge next month and I am wondering whether or not I can sell the house to my buddy. If so, I have several questions:

1) If I can sell it, at what stage would that be possible (after discharge?)
2) What would the tax liabilities be?

I am really hoping that as I leave my house I can leave with a few bucks. Any advice would be greatly appreciated.

[justbroke]

1) If I can sell it, at what stage would that be possible (after discharge?)

No you can't sell it. You'd have to redeem it first. Redemption allows you to purchase it for the amount bid for the premises, plus interest and some other costs. .

See Michigan 600.3240 Redemption of premises.

(2) The amount required to be paid under subsection (1) is the sum that was bid for the entire premises sold, with interest from the date of the sale at the interest rate provided for by the mortgage, together with the amount of the sheriff's fee paid by the purchaser under section 2558(2)(q), and an additional $5.00 as a fee for the care and custody of the redemption money if the payment is made to the register of deeds..

2) What would the tax liabilities be?

If you actually redeemed the property and then sold it, it would be the same as if you had just sold it. However, you should see a competent tax specialist. You would file Form 2113, Schedule D for capital gains and you may be able to realize the one-time $250K gains deduction for the sale. All of this depends on your tax situation, so I won't speculate. There may be other forms based on Recapture of Depreciation that you took as well. There are a host of forms that may apply... so.

I am really hoping that as I leave my house I can leave with a few bucks. Any advice would be greatly appreciated.

No advice on this tactic as I don't think you can make it work.

Random Thoughts and Words of Wisdom

I probably wouldn't touch this thing until your case discharges and/or it closes. Since there is a redemption period on the home, I'm not sure the Trustee could get interested if you gained from redemption and then a sale. It's all speculative on my part, but why in the WORLD would you want to even start messing with this.

You are going to be discharged as to the deficiency caused by the sale. You get to walk away clean. Why even expose yourself? Take your fresh start and don't look back.

[hereforinfo]

Your friend wants to buy it from you for more than you owe? What is the balance, and how much did it sell for at the sheriff's sale?

Unless it sold for the amount you owe or more, then this doesn't even make sense. You would have to pay the bank the full balance you owe on the loan, and then sell the house to your friend. Is the amount the friend wants to pay less than what you owe? If so, there's still a deficiency balance, not a profit.

[justbroke]

Unless it sold for the amount you owe or more, then this doesn't even make sense. You would have to pay the bank the full balance you owe on the loan, and then sell the house to your friend. Is the amount the friend wants to pay less than what you owe? If so, there's still a deficiency balance, not a profit.

Actually, I first thought this too, but he filed Bankruptcy under Chapter 7, so that would wipe out any deficiency. The real question, and you get to it anyhow, is why even think about doing this? It makes no sense at all.