Tax Ramifications of a short sale ... prior to taking the Certified Short-Sale Professional course from RealtyU I was under the impression that you you would be given a 1099 for the amount that was forgiven by the lender.
YES and NO - If you are INSOLVENT (read previous blog http://activerain.com/blogsview/470140/Short-Sale-Myths-Part) than you can use IRS code 108(a)(1)(b) also known as 1401 which states that a borrower who is INSOLVENT at the time of the taxable event is exempt.
Additionally, President Bush signed the Mortgage Debt Relief Act of 2007 last December which allows those that experience a short sale be exempt from the first $2 million dollars of debt forgiveness if married filing jointly.
The types of indebtedness will be discussed in another blog.
Great class from RealtyU http://www.realtyu.com/