Will the IRS come after the difference if I short sell? 2 Answers as of September 07, 2010

I am thinking about short selling my house. If I do, will the IRS 1099 me for the difference between what I owe and the sale price? Thank you.

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E. Ray Critchett, Zaino & Humphrey, LPA
E. Ray Critchett, Zaino & Humphrey, LPA | Ray Critchett
Debt cancellation and/or "short sales" can result in significant tax consequences to the owner. Debt cancellation is typically taxed at the rates for ordinary income. Contact an attorney and/or a CPA for legal and tax advice before you sell on a short dale or go through a foreclosure. Do your tax planning ahead of time, before it is too late.

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Answer Applies to: Ohio
Replied: 9/7/2010
Law Offices of James C. Bechler, A.P.C.
Law Offices of James C. Bechler, A.P.C. | James Bechler
When you short-sell a house, it is the lender- not the IRS who will send you the 1099. It depends on your particular facts as to whether or not they will send you the 1099 and whether or not you will have to pay taxes on the debt forgiveness.
Answer Applies to: California
Replied: 8/21/2010
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