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Are There Tax Consequences for Short Sale?

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There certainly could be tax consequences for a short seller or foreclosure. The IRS is looking for what they call debt forgiveness. And they’re considering that income, and if that’s income then you would pay taxes on it. But that is only, at least the way the law stands today, if you were talking about an investment property.

If it’s your primary house you’re not going to get hit by that. And that’s also negotiable. A lot of times in my cases I’ll ask the bank to give what they call 1099 C for a thousand dollars instead of $150,000 in order to make sure that we limit the tax liability. So it’s something to be considered about you probably should consult your tax expert, if you really want to know the truth about it.

But this is enough to get you through.

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