| Short Sale Tax - IRS might get you The current | | | | his liabilities exceed his assets. The seller will have |
| Real Estate market is full of sellers who are going | | | | to come up with evidence of this to IRS when |
| through a short sale situation. In a short sale the | | | | taxes are done. |
| lender is accepting less money then the total | | | | In most cases these exceptions would work. |
| amount due. Be aware the IRS considers debt | | | | Especially since most lenders require; to show |
| forgives as income. This matter is best left to a | | | | financial hardship in order to convince them to do |
| CPA and/or their attorney. In general most people | | | | a short sale. Seller needs to notify the IRS why |
| don't have the money to hire an attorney, so | | | | the dept forgiven shouldn't be counted as income, |
| they seek a real estate professional for advice. | | | | if the seller doesn't take action the IRS could |
| Many agents don't specialize in this field and don't | | | | consider dept forgiven as income. |
| have the knowledge of potential tax liabilities that | | | | For more information, contact a Certified Public |
| could arise. There are some exceptions to debt | | | | Accountant. Buyers of Short Sales should consider |
| forgiveness tax. | | | | doing more research on the topic and/or consult a |
| IRS does have exceptions -In the even of a | | | | local short sale specialist. The process takes a bit |
| bankruptcy discharge, the forgiven dept can be | | | | more time and paperwork, but could be a great |
| included in the bankruptcy. -If the seller can prove | | | | opportunity. |