Questions from homeowners on my site

[877YouKeep]

Daniel in Maricopa County asked "If the foreclosure sale price is less than what is owed on the property/mortgage will the IRS come after me for taxes on the difference? I owe 2 mil on my mortgage what if the difference is 1 mil? I couldn\'t afford the taxes what could I do?"

I know in the past when I did short sales, I would request to eliminate or reduce the tax implication for the sale and it would help in some instances. In today's market I do not think lenders are willing to negotiate I think they just automatically send the 1099 on the same day the short sale funds. The answer is yes, if there is a one million dollar discount there will be a 1099 generated.

[Corey1023]

Talk to your CPA about the requirements to get that tax abated. You will be issued a 1099-C, then you will have two options, well 3 really but the 3rd isnt really the outcome we want =P.

Anyway, the two favorable options are to either A. Show you are currently in or have recieved a discharge in a bankruptcy, in which case you are not liable for the taxes on that loss. Or B. If you can demonstrate that you are currently insolvent (your debts add up to more than your assets, then you can also file a request with the IRS to have it abated. Do not construe my information for legal or accounting advice, consult a CPA, this is only intended to be a guideline to show you where to look for answers, namely your CPA or Attorney and not me