I am searching for all the forms I need to work a short sale. In that search, I ran into a post and this guy said you should be able to at least tell your seller about these options available to him…
Can someone enlighten me on then three options below with respect to helping them not get slammed with the taxes that happen if I short sell thier property?
Here is a part of the post:
What exemptions are available to avoid “debt relief” taxation? If they answer #1 with a) the “insolvency exemption” or b)bankruptcy or c)if it’s a purchase money note (in a non-recourse state)…you have an agent with some expertise in short sales. Although an agent should never give tax advice, they should be aware of the remedies available to the homeowner. If you get the “deer-in-the-headlights” look, you might want to interview a few more agents.
Well stop blowing smoke here. People are trying to learn, and by you trying to discourage them, what you are trying to hide.
I will tell you now buddy, the secret is out. There are plenty of other ways to find leads.
Who is specifically looking for short sales? A short sale is the second to the last way to acquire a property. If there are no other ways, than a deed in lieu. Then the short sale is the best option.
If you are a true investor, your goal should be to encourage and stop hating.
All, please be sure to read all the posts in many of the forums on this board. I just know its hard to throw out very knowledgable posts from various posters in favor of the opinions of one poster.
I’m not sure what the issue is with short sales. Sometimes they are the only way. With all of the 100% financing that’s been done, there is no shortage of homeowners who have a house that is fully leveraged or even over-leveraged, especially if the house has not been maintained properly during the holding period.
So, I perused the IRS form. I don’t understand what it is doing to the amount that was short saled? Is it making the seller liable, or is the form allowing them to not count it is income. Dear God, I feel like an idiot. I hope I never get audited, the IRS confuses me!
it counter-acts a 1099 (income tax on the debt forgiven)
You still want to ask the bank for a “satisfaction” and hold them to it. Usually can slap that on the Purchase Agreement stating that one of the conditions or contingencies is that the bank report the mortgage paid in full and not seek any deficiency judgments against the homeowner in the future.