Will The Short Sale Seller Have To Pay Taxes?
Will the short sale seller who borrowed money for his/her mortgage pay extra income tax if the bank sends a 1099C for the deficiency? Here is a copy of the 1099 C ; http://www.irs.gov/pub/irs-pdf/f1099c.pdf
If the subject property is the borrowers Primary Residence for a short sale, then the taxes on the 1099 will be calculated based upon the Mortgage Forgiveness Debt Relief Act of 2007 HR3648. Let's go to the source; The Internal Revenue Service,http://www.irs.gov/individuals/article/0,,id=179414,00.html. Being the short sellers primary residence qualifies, you need to be using your principal home to use this tax forgiven Act.
How long do I have to take advantage of the Mortgage Forgiveness Debt Relief Act of 2007? This is only good until December 31. 2012 and the it expires. You have 7 months to get your short sale completed. To date this is 2012 and the Mortgage Forgiveness Act has been around for almost 5 years.
Why Are You Still Deciding on A Short Sale? You may want to jump in now and take advantage of this Act.
If the borrower is not using their primary residence in a short sale situation, The Mortgage Forgiveness Debt Relief Act of 2007 HR3648 does not come into play. You will end up losing your property and may still have to pay the IRS.
Contact Susan J Penn, PA, EWM Realtor for a Short Sale Listing Appointment Today