What is the effects of letting an investment property go into foreclosure?
I have been trying to find out what happens when letting an investment property go. Is it the same as a normal foreclosure or short sale, where you get taxed on the difference? Or is there some other route this takes. Just a question not my situation! A: I do not think you will be taxed for the diference. When a forclosure property is sold a your local courthouse. It is sold by the lender with a substitute trustees deed. That means that it is not you that is selling it it is the lender. The lender would be responsible for any tax liabilities as far as a shortage or overage on the sell of the property. The onlly thing you will suffer is a big blemish on your credit.