What Are the Tax Ramifications Of A Short Sale?
When a lender agrees to a Short Sale and sells a property for less than the outstanding mortgage debt, the amount of the debt that the lender writes off is treated as ordinary income. Despite the fact the owner is in default or facing foreclosure, this amount is treated as forgiveness of debt, and the taxpayer will typically receive a 1099 for the amount of the cancellation of debt. The amount of the debt or the ordinary income may or may not be subject to taxation depending upon different circumstances. Under the Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) signed by the President in 2007, IRS code ยง 108(a)(1)E), provides that a taxpayer will not be taxed upon cancellation of debt income if certain conditions are met. For further details CLICK HERE: Disclaimer: Please note this is for informational purposes only. Each and every situation is unique and different unto it’s own. For your specific situation please contact us immediately at 800-997-3437 to work with our specifi
