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What are the tax ramifications of foreclosure or a short sale currently?

April 26, 2017Currently foreclosure ramifications sale short tax

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What are the tax ramifications of foreclosure or a short sale currently?

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Currently if you short sale your property your bank will issue the seller a 1099 for the amount of money they lose. Prior to 2007 these 1099s would be additional taxable income and the seller would owe the IRS taxes accordingly. Currently and until January 1st 2012 the homeowner in most cases is exempt from the tax liability associated with these 1099s on owner occupied properties.