Will I Have To Pay Taxes On The Deficiency After A Short Sale?

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

Well that’s a good question. As most of you know the Mortgage Debt Relief Act of 2007 expires on 31 December 2012. This is creating quite the stir in the Short Sale world. In fact, many of the “Short Sale Gurus” out there, including CDPE, are using this as a reason to scare homeowners into doing a Short Sale now before they end up owing Uncle Sam a huge tax bill.


As with anything this important I have spent the last week doing as much research as I could on the issue. My conclusion is that if you do a Short Sale and end up owing taxes on the Forgiven Debt (deficiency) then you need to seriously consider finding a new Tax Professional.


Of course I am NOT a tax professional. This is just my opinion based on my research.


But this guy is a Tax Professional and his opinion is in line with my research. I bet he’d be willing to help you.

 

Some other resources.

 

IRS: Selling Your “Main Home”

IRS: Capital Gain Taxes

IRS: Form 982

Posted by

 

Join Our Facebook Fan Page Check Us Out On Google+ Follow Us On Twitter

 

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

 

 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

 Copyright © 2017 http://www.brokerbryant.com/ | All Rights Reserved

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Carla Harbert 06/21/2012 01:04 PM
Topic:
Real Estate Best Practices
Location:
Florida Orange County Orlando
Groups:
Real Estate Rookie
Tags:
short sale
deficiency
debt relief act

Spam prevention
Show All Comments
Rainmaker
756,887
Thom Abbott
MyMidtownMojo.com |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA
Midtown Atlanta GA Condos For Sale

Broker Bryant...I suspect this should be good information for all, since your tax return is a FEDERAL document! I've sent this along to my accountant to take a look at!

I'll be sharing this info on my site for sure!

I just hope we can soon get to the point of short sales being somewhat short on the time frame. I've got a listing now, Under contract since March, and I can tell the Buyer is staring to get squirmy......

May 27, 2012 11:03 PM #1
Rainmaker
177,562
Erv Fleishman
Realty Associates - Boca Raton, FL
Luxury Prop Specialist Realty Associates

We live in a strange time.

we need jobs.

Washington is dysfunctional and we can count on nothing.

It is hard to do business without a clear picture.

Thus, we all guess.

Change is coming. 

May 27, 2012 11:10 PM #2
Rainmaker
738,079
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

B:  This is some very good Info for all,keep up the good work and good luck in 2012,  E

May 27, 2012 11:24 PM #3
Ambassador
1,229,631
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

'Scare' is a pretty strong word. I'd say that they are definitely using this for leverage. I wonder when/if it will be extended.

May 27, 2012 11:29 PM #4
Rainmaker
592,907
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

 

Bryant,

Every new year so called "tax professionals" promise to get you bigger tax refunds than their competitors! The facts are all you can hope for is to pay the least legally possible. You said "you need to seriously consider finding a new Tax Professional." I think you mean: Find a new conspirator!

Taxes on forgiven debt have been with us a long time it’s well law and case law. The election will be over when the Mortgage Debt Relief Act of 2007 expires neither side will be trying to buy votes and this is a freebie! We’ve been told that letting a tax break expire is not a tax increase.

What is your hope based on?

What info?

Bill

Who wants to be a test case?

This is asking for trouble!

God protect the gullible.

 

May 27, 2012 11:29 PM #5
Ambassador
1,960,405
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

That is a good video BB

I may use it as a link to send to possible clients

Have a great Memorial Day!

May 28, 2012 12:35 AM #6
Rainer
234,697
David Grbich
Realty One Group - www.FindCARealEstate.com - San Juan Capistrano, CA
Orange County Real Estate - 949-500-0484

Thanks for sharing - guess the main point is that the Mortgage Debt Releif Act of 2007 definitively addresses the tax implications on the cancelled debt - if not extended a good accountant should be able to ensure the same outcome but the ceratinty of the Act is comforting. 

May 28, 2012 01:30 AM #7
Ambassador
4,299,366
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Bryant, not sure why this post still does not show as featured post! Very powerful and informative. Though not sure about how credit card 'forgiven debt' can be adjusted in our returns.

Jun 21, 2012 01:23 PM #8
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
1,142,050

Bryant Tutas

Selling Florida one home at a time
Ask me a question
*
*
*
*
Spam prevention