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What Are The Irs Tax Implications Of A Short Sale And A Foreclosure?

by on September 20, 2009

If уου ɡеt $50,000 οf debt frοm a (lender $20k οח $70k note) іѕ tһеrе a implication? Hοw іѕ tһаt frοm јυѕt tһе property foreclosure?
Please don’t аחѕwеr іf уου аrе јυѕt – I саח ԁο tһаt οח mу οwח

Tagged as: Foreclosure, Implications, Sale, Short, What

{ 3 comments… read them below or add one }

Take Responsibility September 20, 2009 at 1:26 am: There is no difference check out this link from irs.govhttp://www.irs.gov/faqs/faq4-4.html
it has the information and includes info concerning if you were in bankruptcy. For further information call 1-800-829-1040
Saïd H September 20, 2009 at 1:54 am: The person who shorted the bank gets a 1099-C Cancellation of Debt. It is taxable income, UNLESS THE recipient is insolvent. If partially insolvent, then only the part of the debt less the insolvent portion is taxable.
So if someone WALKED on a note, but had assets greater than debts (including the house and original note), then someone gets a tax surprise!
Tax Advisor
sdmike September 20, 2009 at 2:18 am: The bank should issue a 1099 for debt relief of $50,000–and that amount can be taxable to the person who owed the debt.
If the home was a business property, there may be a loss on the home to offset part of the gain.
Additionally, if the taxpayer is bankrupt or insolvent, the debt relief may be excludable from income. In broad terms, to be insolvent, the taxpayer’s liabilities must exceed their assets.
Unless the person is willing to simply include the $50,000 on his tax return, further research or hiring professional help is in order.