“Will there be any tax consequences to doing a short sale?”
Typically, the tax consequences will be less severe vs. letting the home go to foreclosure.
If the home is sold at foreclosure auction, you will still receive a 1099-A for the amount the lender lost due to the sale.
In a short sale, most lenders, except for those that are out of business and not worried about the O.T.S. – Office of Thrift Supervision, will ALWAYS give you a 1099-C for the amount they have lost due to the short sale, if they decide to not seek a deficiency judgment. And we’ve found that in almost EVERY case they will opt to send you a 1099-C for the amount of the loss versus seek a deficiency due to the costs and length of time it would take to exercise that option.
We always recommend that you consult with a CPA regarding taxes, and ask that you become familiar with and ask your CPA about IRS form 982 prior to deciding if you want to pursue the short sale as form 982, if you qualify, would absolve you of paying the taxes on the deficiency due to you being deemed insolvent.
I am not a CPA or qualified as a licensed professional in the field of taxes so I strongly suggest you seek competent professional counsel for your tax related questions.
If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.
Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company
1-702-204-3945 Direct
1-206-971-5033 Fax
kenny@tfmcpartners.com
