Skip to content

My lender sent me a 1099 after a short sale

March 21, 2013

It’s tax season and I have been getting calls from previous short sale clients who have received a 1099 from their lender after a short sale.

According to the IRS, The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision covers short sales in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if
married filing separately). More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

Individual receiving a 1099 after a short sale can file  Form 982 to take advantage of the Mortgage Debt Relief Act of 2007 exclusion.

 

Notice: This article is not intended as legal or tax advice for you or your specific situation. If you need tax or legal advice, you should consult your accountant or attorney.

 

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: