Short sale & 1099 & IRS

[sqa4life]

Hello,
We've recently short sold our primary residence home (in Feb 2010). We owed 345k and short sold for 237k. I heard that the bank (BofA) will issue a 1099 form. When do I expect this form?

Also, do we qualify for the Mortgage Forgiveness Debt Relief Act of 2007?

Thanks

[Maurice Bedard]

Hello,

You should be receiving the 1099 shortly and you should probably qualify for the state and Federal debt forgiveness of relief act.

Here is some more information on them for you;

California Enacts Mortgage Forgiveness Debt Relief | Loans - Credit - Debt - LoanSafe.org

Mortgage Forgiveness Debt Relief Act | Loans - Credit - Debt - LoanSafe.org

Cancelled mortgage debt form 1099 c California | Loans - Credit - Debt - LoanSafe.org

[ml143333]

Hey there!

I live in Virginia and had a short sale in 2009 with CitiBank. All went well actually all things considered.

We owed $138k and they forgave $20k. We received a 1099 and had to claim all of it because we refinanced. Ended up owing both federal and state. Paid state outright, but had to make a payment arrangement with the IRS.

If the house was your primary residence, you lived in it for two of the last five years and you didn't refinance, you should be able to use the Mortgage Debt Relief Act. Of course, if you can claim insolvency then you are good to go under the Debt Relief Act too.

[blue44]

Hello,

You should be receiving the 1099 shortly and you should probably qualify for the state and Federal debt forgiveness of relief act.

Here is some more information on them for you;

California Enacts Mortgage Forgiveness Debt Relief | Loans - Credit - Debt - LoanSafe.org

Mortgage Forgiveness Debt Relief Act | Loans - Credit - Debt - LoanSafe.org

Cancelled mortgage debt form 1099 c California | Loans - Credit - Debt - LoanSafe.org

Is there a mortgage forgiveness debt relief for the state of Oregon? We're in the process of doing a short sale but unsure about tax implications in the state Oregon. Please advise.

Thanks,
Blue

[sqa4life]

Hey there!

I live in Virginia and had a short sale in 2009 with CitiBank. All went well actually all things considered.

We owed $138k and they forgave $20k. We received a 1099 and had to claim all of it because we refinanced. Ended up owing both federal and state. Paid state outright, but had to make a payment arrangement with the IRS.

If the house was your primary residence, you lived in it for two of the last five years and you didn't refinance, you should be able to use the Mortgage Debt Relief Act. Of course, if you can claim insolvency then you are good to go under the Debt Relief Act too.

Thanks everyone for the help.

Ouch! we refinanced and combined 2 loans into one. didn't take out any cash though. Am I still qualify?

[sqa4life]

Thanks everyone for the help.

Ouch! we refinanced and combined 2 loans into one. didn't take out any cash though. Am I still qualify?

Update: I read this whole article and I don't see anywhere that mention you have to live in the house for 2-5 years and did not refinance in order to qualify for the debt relief:
http://www.irs.gov/pub/irs-pdf/p4681.pdf
Maybe I missed it.

[ml143333]

All I'm saying is check with your CPA or Tax attorney - don't take the word of your real estate agent or the mortgage company. We took the we took their and didn't even think about asking a tax person and we couldn't use the mortgage debt relief act because we refinanced and didn't use the money toward the house.

[sqa4life]

Hello,

You should be receiving the 1099 shortly and you should probably qualify for the state and Federal debt forgiveness of relief act.

Here is some more information on them for you;

California Enacts Mortgage Forgiveness Debt Relief | Loans - Credit - Debt - LoanSafe.org

Mortgage Forgiveness Debt Relief Act | Loans - Credit - Debt - LoanSafe.org

Cancelled mortgage debt form 1099 c California | Loans - Credit - Debt - LoanSafe.org

Thanks Moe.

Weird, I haven't received the 1099 doc from BofA and my SS transaction has been completed a few months ago.

Maybe they will send out at tax time (end of the year)?

[babbles]

I am doing a short sale with EMC. I wanted to work out a promissary to pay the difference of about 20k. Would i still be issued a 1099 or still have to qualify for debt relief?

[Maurice Bedard]

Thanks Moe.

Weird, I haven't received the 1099 doc from BofA and my SS transaction has been completed a few months ago.

Maybe they will send out at tax time (end of the year)?

My understanding is that it has to be sent out in the same calendar year. So I guess it could be any time between now and then.

[Maurice Bedard]

Is there a mortgage forgiveness debt relief for the state of Oregon? We're in the process of doing a short sale but unsure about tax implications in the state Oregon. Please advise.

Thanks,
Blue

I am not sure Blue...

[babbles]

I am doing a short sale with EMC. I wanted to work out a promissary to pay the difference of about 20k. Would i still be issued a 1099 or still have to qualify for debt relief?

[amiesheikh]

I am doing a short sale with EMC. I wanted to work out a promissary to pay the difference of about 20k. Would i still be issued a 1099 or still have to qualify for debt relief?

Is it your primary residence? If so it would qualify under Mortage Debt Forgivenenss Relief Act and you won't have to worry about the 1099c or deficiency judgement. If it's your primary and your income is right it may actually qualify for the HAFA program.

If your making payments via a prom note then the debt hasn't been cancelled yet so they shouldn't issue a 1099c yet.

Talk to your accountant. There is a way that your acountant can prove that your wre inslolvent at the time of the short sael and that would reduce or get rid of tax consequences.