Income tax consequences on a short sale

86482901_XS

 

 

 

 

 

 

 

 

Are there any income tax consequences on a short sale? No, not this year at least. Last year, Congress extended the exclusion for another year. If they had not extended it and you sold your home as a short sale, the lender would have reported the forgiven debt amount to the IRS as income. The lender would have sent you a Form 1099-C reporting the forgiven debt amount. You would then have to claim that amount on your income tax return as a gain.

For example, lets say that your mortgage balance is $600,000. The lender is able to sell your home for $500,000 in a short sale. The amount debt that the lender has forgiven is $100,000. This is the amount that gets reported to the IRS and on which you have to pay taxes. However, since this exclusion has been extended until December 31, 2013, you won’t have to claim it as income on your 2013. However, if your short sale occurs in 2014, then you will be liable for taxes on the forgiven debt.

Home

Share on facebook
Share on twitter
Share on linkedin

More Posts

President Trump has done:

President Trump has done:

Dude has been in office for 3½ years…. what has he done? Other than dodging the darts the media and Pelosi have thrown?!? What has PRESIDENT TRUMP and his cabinet accomplished…..Here you go:

Send Us A Message