The first hurdle you need to cross in California is whether this debt is recourse or non-recourse. If this is a purchase money note it is non-recourse by definition. If you refinanced the property or the note says otherwise it is probably recourse. The difference is important. Non-recourse debt is not subject to cancellation of debt income and the "sales price" used to calculate any gain or loss from the disposition of the property is different.
Henry Daniel Lively Newport Beach Tax Lawyer
Posted over 14 years ago.
The first hurdle you need to cross in California is whether this debt is recourse or non-recourse. If this is a purchase money note it is non-recourse by definition. If you refinanced the property or the note says otherwise it is probably recourse. The difference is important. Non-recourse debt is not subject to cancellation of debt income and the "sales price" used to calculate any gain or loss from the disposition of the property is different.