Northern Virginia Short Sale Sellers Need to Know the Definition of a 1099
This post is timely since the end of 2010 is drawing near. Tax forms wil be coming out in late January and anyone who has completed a short sale needs to be ready for their 1099 to arrive.
Make sure you consult with a tax professional to determine whether your sale qualifies for the Mortgage Debt Relief Act of 2007. If you owned an investment property and sold it as a short sale and hadn't thought about the tax consequences you definetly want to read the rules.
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Northern Virginia Short Sale sellers often hear the term 1099. So what exactly is a 1099?
A 1099 is a form that reports income other than wages and salary to the IRS. As a Northern Virginia Short Sale seller, what can be reported to the IRS on a 1099 is the amount of forgiven debt by a lien holder. In other words, the amount not repaid, but forgiven by your mortgage holder(s) in a short sale.
When this income is reported to the IRS, you are expected to pay income tax on the money. However, many short sale sellers find tax relief in the Mortgage Debt Relief Act of 2007, that has been extended to 2012.
When considering a short sale, please consult your tax professional for information on how a 1099 can affect you.
Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155. To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com. Or you can visit her website: www.nvarealestate.net.
Header photo is Lake Manassas in Gainesville, VA taken by Chris Ann Cleland.
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