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We Are Trying to Do a Short Sale But What Are the Tax Consequences. – Monica

Owe 885000.00 on home. Home will short sale for about 600000.00. Primary residence. Live in California. Conventional loan.

We have been working on a loan modification and are unsuccessful in getting a permanent modification, which is what we have been trying for. We have been offered several temporary solutions. We are now looking at Short Sale. I have been getting different feedback on what we may or may not owe after the sale. We are already hurting as it is and this would be devastating. Does anyone know about these tax consequences and should we consult with a Tax person? Real estate lawyer or Tax lawyer? I just want honest reliable information. Thank you.

Monica




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Steve Rhode

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4 Comments

  • You should consult a tax person. Depending if you have refi’ed or not, depending whether you live in an anti-deficiency state, and depending if the bank issues a 1099-C the answer may be different. If you did refi and took out money for vacations, paying of credit cards, buying a new car; then you may put in a position to report Cancellation of Debt income. Again consult a tax person.

  • You should consult a tax person. Depending if you have refi’ed or not, depending whether you live in an anti-deficiency state, and depending if the bank issues a 1099-C the answer may be different. If you did refi and took out money for vacations, paying of credit cards, buying a new car; then you may put in a position to report Cancellation of Debt income. Again consult a tax person.

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