Thursday, August 11, 2011

The Bailing-Out Banks: Free Money to Leave!

Interesting little news-bite from Schenck CPA's.

...A surprising number of banks are offering incentives to move commercial real estate debt elsewhere. The incentives usually involve restructure or cancellation of debt, and you may need to know the tax consequences. The general rule is that cancellation of debt is taxable unless an exception applies. I’ve dealt with local deals involving debt reductions of 25%, 33%, and even up to 50%....

("Move elsewhere" means "find another bank to lend you the money.")

The offering Banks are of two sorts.  One group has been whacked by FDIC/CoC/FRB examiners as having too much of their assets in commercial real estate.  The other group is large nationals who haven't been whacked (yet) but who want to reduce CRE exposure.


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