How much do I owe in taxes if I do a Short Sale?
The subject of taxes on a short sale come up almost as much as what is a short sale .
Short Sale taxes are to some extent problematic when opposed to the typical real estate transaction. First of all, if the home is the seller's primary residence and they sell it via short sale then they are exempt from taxes on it under the Debt Forgiveness act of 2008 (was extended). Therefore short sale taxes don't really come into play in this instance.
For investors or people who have moved on however, taxes could play a part. However, as this real estate video shows, just because you received a 1099 doesn't mean you owe taxes. In our scenario, the investor acquired a home for $100,000, put $20,000 down as a down payment. However, he had to short sale the home for $50,000. He would probably obtain a 1099C for $30,000 (if he used the Jarvis Team). Many accountants would say that the bill due to uncle sam for short sale taxes would be
$30,000 times your tax rate. Nonetheless, a good accountant will see that the investor ALSO experienced a loss, which can decrease these taxes.
I'm not short sale accountant or attorney so be sure to observe the Short Sale Tax Video. but it sure looks like investors shouldn't owe any short sale taxes let alone any taxes period. One thing that will throw off this conversation is previous depreciation taken on the home and home owners that did not buy as investments but have rental homes for example that they purchased through non-traditional financing such as 100% financing.
Nevertheless, if you purchased your home for a higher value and sold it for less, there's still a loss. For more answers consult with a CPA.
If you have other short sale concerns comment below or call 770-406-6123. You can also learn more by watching our real estate videos .
By Joshua Jarvis Real Estate Agent with Keller Williams Realty - Atlanta Real Estate 255736
Posted on September 26, 2011 05:30 PMSource: activerain.trulia.com