Legal Question in Real Estate Law in California

Short Sale and Taxes

I have recently sold a home in California for as a short sale, closing was Dec 2008. We sold for $165K and owed $315K. This puts us in the hole about $150K. This was a refi done in 2005. I have an option to request a 1099 for the remaining amount that is outstanding or allow the process to take it's course and allow them to try to collect for 2 years. Then possibly receive a 1099. I am not sure what to do. Do I get the 1099 now or wait for 2 years. What about the Mortgage Forgivness Debt Act 2007, will it still apply in 2 years?


Asked on 2/05/09, 10:01 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Short Sale and Taxes

I think I would need more details of what you're calling a short sale. Normally, the short sale ends your connection with the sold home, causing the supposed "forgiveness" of the loan and the triggering of deemed taxable income to occur right then and there. Why was this not such a sale? Did you do this without the lender's participation?

You might want to ask this question of a private tax advisor or the IRS itself.

I do not understand who is the "them" that might be trying to collect for two years, if this was a standard short sale.

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Answered on 2/07/09, 5:06 pm


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