In the not-so-distant past, a short sale meant the lender forgave part of the home seller's debt, but the home seller - many times to his or her surprise - had to pay federal taxes on the forgiven amount because the IRS treated it like income. Under new tax rules, however, the lender sends a 1099-C, Cancellation of Debt, to the home seller in most cases. The forgiven debt does not have to be included in taxable income, and it gets reported instead on Form 982. To be eligible for debt cancellation, the mortgage must have been a primary one on a principal residence; the cancellation occurred between 2007 and 2012; and the mortgage's principal balance must be less than $2 million ($1 million if filing separately). As with any tax matter, home sellers should keep all paperwork to back up their claim in case it's questioned. It's also a good idea to consult a tax attorney on any tax issue. For more information, go to www.IRS.gov.
"This is good news for many Sellers that are faced with the difficult decision to quickly sell their home," says Tampa Bay Realtor and Certified Fractional Real Estate Professional Kenny Hayslett of the Hayslett Team. "This newly forgiven debt provides some temporary relief to those that would otherwise be paying additional taxes on property no longer tied to them."
Kenny Hayslett and the Hayslett Team are equipped and knowledgeable in assisting Sellers with a variety of needs --- contact the Hayslett Team today at 727.443.6700 with your questions or desire to sell your property as smoothly and as efficiently as possible.
"This is good news for many Sellers that are faced with the difficult decision to quickly sell their home," says Tampa Bay Realtor and Certified Fractional Real Estate Professional Kenny Hayslett of the Hayslett Team. "This newly forgiven debt provides some temporary relief to those that would otherwise be paying additional taxes on property no longer tied to them."
Kenny Hayslett and the Hayslett Team are equipped and knowledgeable in assisting Sellers with a variety of needs --- contact the Hayslett Team today at 727.443.6700 with your questions or desire to sell your property as smoothly and as efficiently as possible.
Posts
