Am I still liable for tax on a 1099 with a shortsale vs a Foreclosure?
Dec 22, 2009 in
Financial and Loan Tips
Donovan
My home is very close to foreclosure. The property is worth about 1/2 the amount of the loan. Since the loan(s) is a 20/80 the house is not covered by PMI. If the bank agrees to a Shortsale, am I still liable for the tax on the debt forgiveness on a 1099 under the congressional debt foregiveness act?
My home is very close to foreclosure. The property is worth about 1/2 the amount of the loan. Since the loan(s) is a 20/80 the house is not covered by PMI. If the bank agrees to a Shortsale, am I still liable for the tax on the debt forgiveness on a 1099 under the congressional debt foregiveness act?
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2 comments
Real Estate Guy on December 24, 2009 at 5:00 pm
YES!!!!!!!!!!!!!!!!!
talk with a lawyer
Rush is a band on December 27, 2009 at 10:27 pm
You won’t get hit with federal taxes if they forgive the difference. State taxes are an entirely different matter.
Many foreclosures will not forgive the difference and they will come after you for the balance. That could cause liens on property, wage garnishment and possibly even drive you into bankruptcy.
Many short sales agreements will include a forgiveness clause, but be sure it’s there.
good luck!