Short sale on rental property - Insolvency applied?
Date: Thu, 09/17/2009 - 14:49
Hi, I am thinking about doing a short sale on my rental property. I guess I will get 1099-C for it, but does anybody have an idea how much $ will appear on 1099-c? Is it whatever the amount that your bank is not able to collect from the sale? Also, Can I use insolvency form to avoid getting taxed?
Well, normally in case of short sale the lender would make effor
Well, normally in case of short sale the lender would make efforts to collect the deficient amount. If that happens then there would be no tax implication to it.
If you can do a short sale, then you need to negotiate/stipulate
If you can do a short sale, then you need to negotiate/stipulate a " Non-Recourse" clause in the contract for Sale.
This means they won't come after you for the balance.
Now, you will NOT get a 1099 -C for mortgage debt deficiency.
But, if your second mortgage is from a HELOC or Equity Line of Credit, then this is treated differently, and you may get a 1099-C.
But everything must be noegotiated up front first.
