Thank you guys, this is great info about short sales.
I get this question a lot. Will I get a 1099 for my short sale ?
What am I going to do with it?
Do I have to pay taxes on the loss?
The homestead situation in Florida dds to the confusion.
Short sales in South Florida are still going strong!
We are writing this short sale series- Busting the Myths and misinformation out there regarding short sales.
You may hear that you will or will not get a 1099 after your short sale. Let’s get the facts straight on the dreaded 1099!
President Bush signed into law the Forgiveness Debt Relief Act in the latter part of 2007.It has been extended to the end of 2012.
The forgiveness act states that if you live in your home for at least two out of the past five years and this home was your primary residence (in the state of Florida that would be your homesteaded property) then you will not have to pay on the deficiency part and that part will not be taxed as income.
You will still get a 1099 from your lender.
If you are doing the short sale on an investment property or on a second home, you do not fall in the Forgiveness act and the loss will be treated as income according to the IRS. It will be up to you and your accountant to prove whether you are insolvent or not and what losses you will be able to offset.
This is where most people get confused. If you don’t have to pay taxes on the loss, why are you going to get or why did you get a 1099 anyways?
Because the lenders are required by IRS law to issue 1099 all the deficiencies on short sales.
It is then up to the taxpayer to bring the 1099 to their accountant or attorney and have it exempted with the forgiveness act.
The lenders are not going to divide up the short sales into two sections; those that have to pay on their 1099s and those that don’t.
The short sale lenders 1099 everyone and then it is up to you to find out the category you fall into.
Calling the short sale lenders and threatening them demanding that they do not issue your client a 1099 will be a waste of energy on your part. If it was me, and I had a choice to do what the IRS tells me to do or to do what you tell me to do, well, that is a NO brainer. Sad, but true.
Contact Nestor Gasset and Katerina Gasset, CIPS, Realtors®, International Properties and Investments, Inc. Licensed Realtors® in Florida at 561-753-0135 to list your property for sale or to purchase a property in Wellington, Royal Palm Beach, Loxahatchee, Lake Worth, Hypoluxo Island, Lantana, West Palm Beach and the rest of Palm Beach County Florida and Port St Lucie Florida. We are accepting referrals.
To view all the South Florida Homes For Sale Click here and then click on Search For Homes.
Disclaimer:The information provided herein is supplied by several sources and is subject to change without notice. Wellington Homes Blog does not guarantee or is any way responsible for its accuracy, and provides said information without warranties of any kind, either express or implied. Entries on Wellington Homes Blog represent the opinions and ideas of the author(s). Wellington Homes Blog does not express the views of International Properties and Investments, Inc or those of the broker.
Copyright © 2009 By Katerina Gasset, All Rights Reserved.*Short Sales South Florida- Fact vs Fiction- Myth #3 Busted!*
Short Sales South Florida- Fact vs Fiction- Myth #3 Busted! was first published on South- Florida-Luxury-Living.com.