Asked by Ute Ferdig, Newcastle, CA • Thu Apr 3, 2008
I have received conflicting information as to how the lenders that forgive a debt in a short sale handle the forgiven debt. Some claim that the lenders will still issue a 1099 and then it's up to the taxpayer to claim the exemption under the Mortgage Forgiveness Debt Relief Act. Others claim that the lenders don't even issue 1099s anymore. Since not everybody who got a short sale approved qualifies under the debt relief act, it does not make sense to me that the lenders would not even issue 1099s anymore as they are not the ones that decide who qualifies and who does not. I would like to hear from my fellow Trulia Real Estate Pros and CPAs what your take is on this.
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