Home Selling in Albany>Question Details

Bigdi48, Home Seller in Albany, OR

If I short sale my house (was the primary in the beginning but now is a second home due to the fact I got married and moved) will I end up with a 1099

Asked by Bigdi48, Albany, OR Sat Oct 9, 2010

If I short sale my house (it was the primary home in the beginning but now is a second home due to the fact I got married and moved) will I end up with a 1099 for the difference of the owed amount and the sold amount? I have tried selling this home for 3 years. It's in La Pine OR.

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APEX Real Estate, LLC’s answer
My best advice is to ask your accountant prior to actually listing, no surprises this way! One of our agents has family in LaPine and is very familiar with the local market. If you need assistance in selling your home and are not currently working exclusively with an agent please do call or email APEX Real Estate, LLC at 541.981.2411, ApexRealEstateOnline@gmail.com. We are able to connect you with an agent to best fit your needs. Plus, we pass along savings to you in these tough times.
0 votes Thank Flag Link Mon Dec 6, 2010
Good Morning!
I'm an agent in your area, if you have any questions and want to sit down to talk about the short sale process. I look forward to meeting with you!
Chaundra Johnson
1 vote Thank Flag Link Sun Oct 10, 2010
Bigdi48
The short sale is only short if the lender(s) approves the sale. Generally that means you need to prove hardship.

Just because you are going to end up selling at a loss makes no difference. If you are on title on your new house (I am assuming that you and your wife bought a new home), know that the lender of your first home is going to ask for a COMPLETE financial accounting of assets and that new home is going to come up.

Also, know that if you are expecting the lender to take a loss, IF you can prove hardship (meaning you are insolvent and cannot pay your bills), then they are still going to ask you to "participate" in the shortage and will be looking at ALL your assets.

If you opt to submit incomplete financial paperwork that would probably be considered fraud.

Just because your first home's value has dropped, and then you buy another home, don't think that the lenders are unfamiliar with every method to avoid taking a loss.

You should talk with an attorney and your CPA before going too much further.

We get posts like yours frequently. You should also know that loan fraud is now being pursued by the FBI, including "strategic defaults", where someone, with assets and means, lets second homes go into foreclosure. A 1099 may be the least of your problems.
0 votes Thank Flag Link Sat Oct 9, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Bigdi - you will receive a 1099 no matter what - your question is more as to - what happens with that 1099 - the bank has to track these funds - they gave the funds and now they are not getting them - a cpa can help - but an attorney is a better choice.

I am very familiar with your area as I am an active agent in La Pine - not sure which property you are talking about but would be happy to take a look at things.

Your situation is a little different than the average person - and there are a lot more questions to figure out what is best for you - I am working all weekend and would be happy to help you out - give me a call or drop me an email -
0 votes Thank Flag Link Sat Oct 9, 2010
The answer is it depends. If you qualify the shorted amount can be forgiven, as well if you make it part of your negotiations with the bank it could be forgiven. Depending on the type of loan and how the write it off will depend on whether you get a 1099. you would need to check with a cpa to see if it will affect you tax wise or if the shorted amount falls under the Obama housing rules enacted a year or so ago.

Please see my blog for helpful info and tips on completing a short sale
0 votes Thank Flag Link Sat Oct 9, 2010
The good news is that they have to notify you before you close what will happen, no waiting 3 months to see if they want to pursue a judgement for the difference. The closing person should be able to fill you in on what is happening and what to expect... for certain. Every situation is different, and you want to be sure when you agree to close on the short sale that it is the best option for you.
0 votes Thank Flag Link Sat Oct 9, 2010
That is between you and your lender. There have been so many different laws passed that it is hard to say what will happen. The original plan was yes you would end up with a 1099 for the difference...then the rules changed to say that is a lender forgives the balance that it should not be seen as a "gift" so no 1099 would be given. SO, the best recommenation I would have at this point is to talk with your lender, make sure they are going to work with you as a short sale now that is is no longer a primary residence and ask them if a 1099 is what they will do with the balance AND see if they are going to "for sure" forgive the balance. Not all lenders do!!
0 votes Thank Flag Link Sat Oct 9, 2010
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