All Forum Posts by: William Wallace

@Ashish Acharya ok, so basically how I imagined it should work in the first place. At the end of it all, I will pay income tax on my net income from the full transaction. Thanks. The wording in some of the references I was going by seems to say that you can't write off HELOC interest unless it was used to renovate, or improve the home against which it is secured. https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law

Hey, I was toying with the idea of using a HELOC to fund a non-real estate investment, specifically buying some debt. It seems to me that even in the perfect situation, where I get paid like 12% interest rate with no chance of default, and I get a HELOC with around 6% interest rate, I'm going to have to pay taxes on the interest I collect, but I cannot write off the interest I pay, and it will probably not be worth it. Am I correct on this?

OK, that makes sense. People see these NPNs for huge discounts, buy them, and forgive some of the debt in order to get some of the principal, and since they got such a discount, forgiving some of the debt is still profitable. This forgiveness of debt counts as income on which they must pay income tax. This whole deal still seems to benefit the person who does not pay the debt. They might have to pay taxes, but its still much less than just paying on time in the first place.

Right, I'm not suggesting it, just wanted assurance that there was something preventing it.

I'm pretty new to the rules and such of buying/selling notes, and I just had a question. You can go right onto fciexchange, and find NPNs that are being sold for huge discounts, sometimes under 5% of the principal owed. Out of curiosity, if you owe money, and know you're behind on your payments, what is stopping you from purchasing your own NPN at a discount, which you created with your own negative behavior, besides the threat of foreclosure?