I am working on a short sale. Mortgage on the property is $550,000 including taxes. I have a short sale proposal to the bank for $460,000. My question is: What tax liability will the SELLER bare on the $90,000 difference. He has NO NET WORTH after the sale of his home. I read somewhere that the bank can only 1099 you if your NET WORTH is equal to or more than the DEBT. Doea anyone know the law?
Check this thread:
http://www.reiclub.com/forums/index.php?board=30;action=display;threadid=18602
If anyone with experience can shed some light on some of those questions, that would be great!