I have a customer who has two investment properties. Does he still have to pay taxes on those lossess due to SS’s? or is it just primary residences that escape unscathed?
any respones guys. this is very important.
My understanding from reading the act that was passed (I am not a lawyer) is that he will have to pay taxes if he receives a 1099 from the lender since he owned them as an investment property. Only owner occupieds benefit from the moratorium on that. Once again, not a lawyer, but it seemed pretty explicit to me.
I’d agree. And being two investment properties, it’s not guaranteed the bank will take the short sale.
Banks WILL consider short sale on both primary as well as investment properties. Owners of investment properties that sell through short sale WILL be liable for debt forgiven amounts that the lenders will send via a 1099.
NOTE: The Foreclosure Prevention Act of 2008, allows business (including RE investors) to carry NOLs from this year back against profits from up to 5 years back.
****Investors NEED to work closely with their CPA/Accountants to run tax scenarios using these new tax incentives to determine if 1099 income from short sale can be offset with losses from previous or future years. Smart investors make decisions based on information and numbers, not guesses or speculation. RUN YOUR NUMBERS and SCENARIOS!
Not 100% sure here but as the seller of the short sale you can try and work it out with the bank for them not to 1099 you the loss. IN a S/S it is all negotiable.