“You have to ask yourself: Are you just renting the home from the bank?” said Michael Joe, a foreclosure expert at the Legal Aid Center of Southern Nevada. “Would it be cheaper to walk away and rent across the street?”
Conroy, 32, and his wife purchased their home for $385,000 in March 2006, a month before marrying. The property was reassessed this summer for $250,000. The couple is trying to save, he said, knowing they may have to move to a bigger place within 18 months to start a family.
“We’ve given up on this dream of having equity in our home,” Conroy said. “We don’t expect to walk away with cash in hand, we expect to pay.”
When considering walking away from a mortgage, most homeowners probably don’t realize there is the potential for capital gains taxes based on what is called a mortgage over basis.