Home Selling in Phoenix>Question Details

Desertraven, Both Buyer and Seller in 85338

If you're insolvent, do you still have an IRS tax liability when short selling your investment homes?

Asked by Desertraven, 85338 Mon Dec 1, 2008

We've got 8, so we need to find out soon.

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It is my experience you need to protect yourself with a clause in your contract that says contract subject to acceptance by mortgage company without deficiency judgment . you will still be w-4d or 1099'd by the mortgage company and unfortunately the only way my clients have avoided that is to file bankruptcy and named irs as a creditor. I have had 2nd trust holders sell the note for the reduced payoff but have not been able to get 1st mortgage holders to do so. Now that the treasury has announced they will not be buying the banks bad notes they may be more willing to bargain again. remember, just because you lost this round does not mean you can not come back again!
0 votes Thank Flag Link Mon Dec 1, 2008
You need to be asking these questions from your attorney or tax person, or both. We as real estate brokers are prohibited from answering questions like these because they are construed as the un-licensed practice of law.
1 vote Thank Flag Link Mon Dec 1, 2008
Work with a CPA yes you would still have IRS tax liabilities.
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0 votes Thank Flag Link Mon Dec 1, 2008
Below is the link to the code. You'll have to check with your tax advisor for information on your specifics. I can't understand how you could end up with 8 homes that you can't afford.
0 votes Thank Flag Link Mon Dec 1, 2008
Although you may get some answers here, I would consult a CPA about any tax questions you have. They are the most qualified person to handle these issues.
0 votes Thank Flag Link Mon Dec 1, 2008
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