Legal Question in Wills and Trusts in Florida
I was approved for a shortsale and was told by word of mouth that I would not owe any money. The house sold for 99,000 and the loan was for 270.000. All I received after the short sale was a 1098. I was told that I would receice a 1099a next year.I dont understand why am I waiting an extra year to receive the 1099a and what is a 1099 a? Can they hold me liable for the 171,000.
2 Answers from Attorneys
A 1098 would be for mortgage interest paid. The 1099a form is an IRS information reporting form regarding the cancellation of debt (the $171,000 in your case) and whether you were personally liable. If you were personally liable ( I assume you were), you may have a gain on your tax return and additional income to report due to the forgiveness of the debt. However, thanks to The Mortgage Debt Relief Act of 2007, taxpayers are generally allowed to exclude income from the discharge of debt on their principal residence. So, if this was your principal residence, you may not have an additional tax burden. If it was an investment property, you may have $171,000 of additional income to worry about on your tax return.
Regarding, your question as to whether "they" can hold you liable for the 171,000, if you are referring to the lender, then yes, they can potentially hold you liable for the difference between the promissory note amount and the short sale proceeds.
Well, word of mouth is about as good as the paper it's written on. You should review the papers you signed. You may be liable for the difference if your attorney/negotiator did not negotiate a deficiency waiver on your behalf. The 1099 is about reporting taxable income, as noted above, not a deficiency. Contact an attorney for specific advice regarding your circumstances. Regards,
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