Avoid problems when you're buying foreclosed Virginia homes by researching tax issues first
When you consider buying foreclosed Virginia homes, tax issues can be both positive and negative. You will gain tax deductions from interest in mortgage payments, your down payment and other homeowner expenses. Yet, you can inherit tax issues from the previous homeowner when you buy a foreclosed home. So you need to do your research.
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Foreclosures typically occur because homeowners could not pay their mortgages. A homeowner in this situation is often behind on other payments, which can result in liens on their property. In Virginia, you will usually buy a foreclosed property if you are the highest bidder at an auction. The tax consequences of buying foreclosed Virginia homes at auction stem from you not having all of the information about the home. Before you place bids at an auction, try to research the property for a second mortgage or lien. These legal claims on the property can include:
- Income tax liens
- Property tax liens
- Mechanic liens
- Homeowner’s association liens
When the mortgage lender forecloses on the property, it does not clear other liens on the property. When you purchase foreclosed Virginia homes, tax issues can be transferred to you even though you’re not responsible for creating the debt that led to the lien. Remember, you are purchasing the property "as is," which means you can inherit both liens and damage.
One of the best ways to avoid this type of problem is to conduct as much research as possible prior to purchasing a property in foreclosure. If you work with a real estate agent, he or she can conduct a title search on the property before you place a bid or make an offer. If you are not working with an agent, a title clerk or county clerk can help you research the property title. While this involves some time and effort, this step can save you money later.
Buying a foreclosed property can provide you with a new home or a profitable investment as long as you can weigh the expenses with the discount on the price. When buying foreclosed Virginia homes, tax issues must be carefully researched and considered. If you are ready to browse foreclosed homes in your area, go to Reply! for free property listings.