Foreclosure in 55407>Question Details

Ruby, Other/Just Looking in San Jose, CA

If i do a short sale on my rental property-has a 1st & 2nd mortgage & is underwater - will i be taxed by IRS on deficiency's &

Asked by Ruby, San Jose, CA Wed Oct 26, 2011

look'g at possible BK? Property located in San Benito County.

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5
You should still proceed with a short sale. It will be better for your credit and allow you to purchase another home in the future more quickly than with a foreclosure on your record. If you are living in California, you should not be expect to receive a deficiency judgement from your mortgage holders or the IRS.
0 votes Thank Flag Link Thu Nov 3, 2011
Yes you will get a 1099 but, unless you have taken out cash, you should have an offsetting loss.
0 votes Thank Flag Link Thu Oct 27, 2011
The simple answer is "YES" ... it will be reported to the IRS. If you have offsetting losses you may be OK. There is no grace for investment properties.
0 votes Thank Flag Link Thu Oct 27, 2011
When considering a short sale it is critical to start the process correctly to minimize or avoid tax consequences.

Every short sale is different. Short salres are the "Wild, Wild, West" of real estate.
Consult with your real estate attorney or financial adviser to understand the options available and the consequences each will have for you.
0 votes Thank Flag Link Thu Oct 27, 2011
Hi Ruby,
For tax questions it is best to consult a tax professional. For general tax in formation concerning this, google the Mortgage Debt Relief Act. It is fairly easy to understand.
Good luck,
0 votes Thank Flag Link Wed Oct 26, 2011
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