The 1099 you get after a short sale...what now?
I frequently get questions from seller's who have recieved a 1099-c after a short sale. The information below should help you if you are preparing your taxes.
Under the Mortgage Foregiveness Debt Relief Act, debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure,or short sale is not income is not taxable under this law. The law applies to debt forgiveness from 2007 through December 2012.
View the IRS's Mortgage Forgiveness Debt Relief Act and Debt Cancellation website for more information.
If you qualify, you will receive a Form 1099-C - Cancellation of Debt from your lender.
Fill out Form 982 - Reduction of Tax Attributes Due to Discharge of Indebtedness and attach it to your federal income tac return.
For tax information, contact the Internal Revenue Service ( IRS) 1-800-829-1040.