Tampa Short Sales Mortgage Debt Forgiveness 1099-C Debt Forgiveness tax consequences
Hello Tampa –
Considering the amount of short sales we have been helping customers with, its become a regular question from customers as to the tax or legal consequences. While we are not attorneys, can’t give legal advice, and always advise customers to consult appropriate legal or tax professionals – there are a couple of well known tidbits of information I’d like to provide that have become common knowledge in our industry.
If you are selling a primary residence and perform a short sale in which mortgage debt is forgiven, up until the mortgage debt forgiveness act in late 2007 – you would have had to pay taxes on the forgiven debt. The mortgage debt forgiveness act eliminated that, not requiring primary home owners to pay the taxes on a 1099 (mortgage lender will send a 1099-C) that a lender may send as long as they fit certain requirements.
If you are an investor or 2nd home seller in a short sale however, you will not automatically get this benefit. There are options in how to handle those scenarios and consequences, and we can certainly recommend a legal or tax consultant to help you with your specific situation. If you are a homeowner that needs a team experienced at helping you avoid foreclosure, contact us and we’ll gladly send you some testimonials and references from customers we’ve helped.