This is such a great explanation of short sales. Thanks so much to Nestor and Katerina Gasset for all of your great post!
Short sales in South Florida are still going strong!
We are writing this short sale series- Busting the Myths and misinformation out there regarding short sales.
Short Sales- Palm Beach County Florida- Myth #1 Busted
Short Sales- Palm Beach County Florida- Myth #2 Busted
You may hear that you will or will not get a 1099 after your short sale. Let's get the facts straight on the dreaded 1099!
President Bush signed into law the Forgiveness Debt Relief Act in the latter part of 2007.It has been extended to the end of 2012.
The forgiveness act states that if you live in your home for at least two out of the past five years and this home was your primary residence (in the state of Florida that would be your homesteaded property) then you will not have to pay on the deficiency part and that part will not be taxed as income.
You will still get a 1099 from your lender.
If you are doing the short sale on an investment property or on a second home, you do not fall in the Forgiveness act and the loss will be treated as income according to the IRS. It will be up to you and your accountant to prove whether you are insolvent or not and what losses you will be able to offset.
This is where most people get confused. If you don't have to pay taxes on the loss, why are you going to get or why did you get a 1099 anyways?
Because the lenders are required by IRS law to issue 1099 all the deficiencies on short sales.
It is then up to the taxpayer to bring the 1099 to their accountant or attorney and have it exempted with the forgiveness act.
The lenders are not going to divide up the short sales into two sections; those that have to pay on their 1099s and those that don't.
The short sale lenders 1099 everyone and then it is up to you to find out the category you fall into.
Calling the short sale lenders and threatening them demanding that they do not issue your client a 1099 will be a waste of energy on your part. If it was me, and I had a choice to do what the IRS tells me to do or to do what you tell me to do, well, that is a NO brainer. Sad, but true.
For more information about short sales read our series at Short Sales Florida.
Contact Nestor Gasset and Katerina Gasset, CIPS, Realtors®, International Properties and Investments, Inc. Licensed Realtors® in Florida at 561-753-0135 to list your property for sale or to purchase a property in Wellington, Royal Palm Beach, Loxahatchee, Lake Worth, Hypoluxo Island, Lantana, West Palm Beach and the rest of Palm Beach County Florida and Port St Lucie Florida. We are accepting referrals.
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Disclaimer:The information provided herein is supplied by several sources and is subject to change without notice. Wellington Homes Blog does not guarantee or is any way responsible for its accuracy, and provides said information without warranties of any kind, either express or implied. Entries on Wellington Homes Blog represent the opinions and ideas of the author(s). Wellington Homes Blog does not express the views of International Properties and Investments, Inc or those of the broker.
Copyright © 2009 By Katerina Gasset, All Rights Reserved.*Short Sales South Florida- Fact vs Fiction- Myth #3 Busted!*
Short Sales South Florida- Fact vs Fiction- Myth #3 Busted! was first published on South- Florida-Luxury-Living.com.
Serving customers in Venice Florida, South Venice, Osprey, Nokomis Florida, Casey Key, Manasota Key, Englewood Florida, Rotonda West and North Port communities. Call me to list your home for sale, answer questions regarding steps you can take to AVOID FORECLOSURE or answer any general questions you may have about real estate.
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This is a great post, Kari. Thanks for bringing it to our attention. I appreciate it.
Heather - Thanks. If you don't already you should follow Nestor and Katerina's Welliington Homes Blog. I find it to be very informative and a great read.
My father is considering a short sale. he lives in Florida. This is on an investment property. Can there be a lien or judgement put on the home he has homesteaded? also in Florida. When he passes away, can the creditors from outstanding mortgages first and second try to collect the debt from his estate? There is still a mortgage on his homesteaded property. But my brother and I may pay it off and therefore quit claim property to us before anyone can put lien on it from short sale. What is the timeline on something like this.
Help anyone??
Carol,
If you would give me a call or email me I can answer some of your questions for you. My email is Kari@DiscoverVeniceRealEstate.com and me cell number is 941-270-1851. Look foward to hearing from you.