Short Sales Require Special Handling To Close Title
Dot Nicklus is Broker and Short Sale Fee Based Expediting Specialist
Equator Banking Intermediary Short Sale Network - United States Depart. of Treasury Trusted Adviser.
Hot Tips from a Tax Advisor
IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) in preparing
2019 Returns and to in preparation for 2020. Check with your accountant and/ the IRS for 2019 file forms yet soo to be publishedthe ins and outs of debt relief, insolvency, and the 1099-C
with Certified Public Accountants, They advised that borrowers who receive a 1099-C in association with a short sale,
foreclosure, or deed-in-lieu should work with their accountant in order to confirm that the 1099-C was actually
completed correctly by the borrower's lender.
One CPA noted that the mortgage interest was lumped in with the amount of debt forgiven (placed in the same box on the form),
and (according to him) that is not the correct protocol. Another CPA noted that often times the entire 1099-C has an inaccurate
amount of debt forgiven. He suggests that borrowers retain their final HUD-1 (estimated settlement statement) from both the
purchase and the sale, as well as any documentation as to the original amount of the mortgage. This way, if the 1099-C
has not been completed correctly, borrower and the CPA can demonstrate correct calculations to the IRS. Debt forgiveness
is taxed unless managed Property. Your property exit plan also needs to include a real estate broker that understand the process.