I owe 120000 on my condo - i am only working part time all year. The value of the property has gone down to 75000. If i do a short sale for 75K

Asked by Orlando, Miami, FL Sat Oct 31, 2009

i can claim a loss on 45000 on the 1099? I originally put down 65K down payment, will that be
a loss of 110000 dollars or just the 45K? Also, according to my income this year, i have almost
none, would i still owe 1099? I know i can ask an accountant, but i thought i would get some
feedback from others first.

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Claudio Rivero’s answer
Claudio Rive…, Agent, Miami, FL
Sun Aug 8, 2010
If this is your primary residence the federal government will allow you to erite off the loss. The Program is called the HR3 3648. You will have to file a form with your taxes the year you sell the property. I am a short sale expert and can help you sell the property and file the form with your accountant.

I also have had to shor selll one of my properties so I know theprocess well and can prep[are your for what to expect. If you have any quaetions you calll me Claudio Rivero at 786-942-1194.
Web Reference:  http://www.claudiorivero.com
0 votes
Javier Olmedo, Agent, Miami, FL
Tue Jan 5, 2010
I think you have the right idea in asking your accountant, they will be better suited to answer this question. Is your condo your primary residence and if so can you prove it (homestead exemption, auto insurance, etc). There might be a difference in what you can claim and what you can't and the percentage of each depending on the category of the house.

Javier Olmedo
Florida Relaty of Miami
javier@olmedohomes.com
Web Reference:  http://www.olmedohomes.com
0 votes
Frank Becerra, Agent, Las Vegas, NV
Tue Dec 8, 2009
I know you know, but talk to an accountant.
The debt forgiveness is for primary residences only, not for an investment. So depending on how you categorized your property on your past taxes, and the address you stated on you taxes will determine the consideration of your property.
I don't know about Florida, but also find out if it is a deficiency judgement state. Some of the banks will not write off the debt, some debt such as equity lines are not considedered mortgages and can de collected for years after the sale of the property, so read whatever the bank gives you in writing when they issue the short sale approval letter after the ofeer has been presented.
As you can see there are too many variables, and all can apply.



Good Luck
Web Reference:  http://www.myhomeinvegas.com
0 votes
Vincent A. S…, , 20015
Tue Dec 8, 2009
I believe the Congress passed legislation to EXEMPT loan forgiveness from income tax for personal residences. More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.
0 votes
Don Tepper, Agent, Burke, VA
Sat Oct 31, 2009
As you and others note, you really have to ask an accountant. However:

You would have an INCOME of $45.000 on the condo--the amount of debt forgiven by the bank. Then, depending on your tax bracket, you'd owe income tax on that amount--possibly from $5,000 to $10,000 or more. (Your tax bracket times that amount of income.)

Further, as with all short sales, you wouldn't receive a penny.

On top of that, you have to demonstrate "hardship" of some sort to do a short sale. Maybe a job loss. Maybe illness. You'd have a difficult time saying to a lender: "I'd like to do a short sale. There's nothing really wrong with my situation, except my condo's lost a lot of its value." In that case, you'd be likely to be facing foreclosure, not a short sale.

And the math is just bad. You put $65,000 down on a $185,000 purchase. Why so much? And you'd be throwing it all away. Look into other options, such as renting the condo out. And absolutely talk to an accountant.
0 votes
Bob Galivan, Agent, South Miami, FL
Sat Oct 31, 2009
You do need to ask an accountant, but I am pretty sure I am correct in the following statement:
You're not losing anything - the bank is. The only loss you have would be cash you put for the down payment. The 1099 you get is INCOME to you, because the bank is forgiving you a debt.
0 votes
Ofelia Loret…, , Miami, FL
Sat Oct 31, 2009
This is definitely not something any Realtor is qualified to answer. Your instinct about asking an accountant is correct; they are the ones who know about taxes. So sorry you're in this situation. Good luck!
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