Receivers May Reduce a Lenders Tax Liability on the Sale of Subdivisions

Marc Brooks called me the other day and announced, ”You know, a lender who forecloses on a new subdivision development that was collateral for a non-performing loan may have to pay ordinary income taxes on all of the sales proceeds as a real estate ‘dealer’. On the other hand, when a borrower or a court appointed receiver sells out the subdivision and pays down the loan, the lender gets to remain a lender.”