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Will you still get a 1099 when you so a short sale on an investment property?
Fri May 2 2008, 16:18 - San Francisco - Agent2Agent - 6 answers
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| Liz Stevens was FIRST TO ANSWER | ||
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Adela....
It is my understanding the bank will issue a 1099 on a foregiveness of dept per the IRS code. In any event you will always want to check with your CPA or tax advisor. Good luck. Sat May 3 2008, 18:03
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You should. Here is a link to the IRS web site page that explains the Mortgage Forgiveness Debt Relief Act of 2007.
http://www.irs.gov/individuals/article/0,,id=179414,00.html Any further questions should go to a CPA. Realtors are not qualified to give accounting or legal advice as we are not CPA's or attorneys. Sat May 3 2008, 13:18 Web Reference: http://www.jedlane.com
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Hi Adela. If there's actual debt foregiveness, the lender is supposed to issue a 1099. Whether you'll have to realize the forgiven debt as income is a different question, which should really be answered by a CPA. I heard that a tax payer who can show that he/she was insolvent (just before the debt foregiveness), may be able to escape having to realize the forgiven debt as income either altogether or a portion thereof. Consulting with a CPA is one of the most important things that a borrower facing foreclosure or a short sale should do before signing short sale papers. I hope this helps.
Fri May 2 2008, 22:01
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All curent "emergency" laws regarding Short-Sales, Foreclosures are "owner occupied". The Tax Foregiveness Act is ONLY for owner occupancy, primary residence. I'd be surprised if they let you do a short sale with an investment property without asking for an unsecured promissory note. That might be the best way to go. If you're getting $100,000 forgiveness and they'll take $25,000 consider it!
Fri May 2 2008, 19:05 Web Reference: http://www.sonomacountyshortsales.com
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The answer for a for a person purchasing a home to reside in is, possibly. The federal government may forgive this debt if it is a purchase money debt. The answer for an investor is expect, the RED 1099. You will need to talk with a CPA, tax advisor or a real estate attorney. If someone is suggesting that you do a short sale, please contact your lender first and see if there is any way to modify your loan or what other programs that they may have in place to help you. If you find yourself in a position that the bank will not work with you then contact your CPA, tax advisor or RE attorney.
I wish you the best in getting your financial house in order. Charles Coachman Fri May 2 2008, 17:37 Web Reference: http://www.CharlesCoachman.com
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FIRST ANSWER
You will most probably receive a 1099 from the bank taking the haircut.
Fri May 2 2008, 16:43
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