1099 on all short sales?

Foreclosures, Short Sales, Tax Foreclosures
1

Question: do all owners receive a 1099 on a short sale for the difference (loss that the bank takes and gain to the owners by forgiving debt)?

Is this capital gains or general income?

Is it for the full face value of the difference or partial?

Thank you experts and noobs alike! :slight_smile:

2

To the best of my knowledge a lender does not HAVE to report the deficency as income (1099). If reported it is not reported as capital gains. There is a IRS form that (supposedly) negates the 1099 due to hardship, but I do not know if it works. Best to prepare for the worst case scenario.

3

I have been told that the difference would be taxed as income, but who knows with so many IRS loopholes. If there are any CPAs on this forum, or anyone else who knows the answer, maybe you could post your answer so we all know ONCE AND FOR ALL.

4

Thanks for the replies. A certain answer would certainly be appreciated from anyone willing…:slight_smile:

5

Find “Dave T” or “mcwagner” in the Asset Protection/Legal forum and ask them…they’ll give you a difinitive answer…

Keith