Does Homeowner Get A 1099 On The Amount That Is Shorted?
Hello everyone,
I hope someone can answer this question that has come up a few times from owners in default.
Do they have to pay taxes for the amount that the bank discounts?
Please help. Thank you
Mike
Thank you for your responses.
How much would they typically be taxed on say a $30,000 discount from the bank? or is there not a "typical" amount or percentage?
Also what do you tell the owner when they ask you that question?
Thanks for your help,
Mike
The bank would send a 1099 for any amount that they had to discount the loan. For example the owner is going into foreclosure and they owe 50,000 on a mortgage for 55,000 and an investor does a short sale with the bank for 40,000 (which he gives in cash to the bank). The bank can then send the original owner a 1099 for the 10,000 that they lost in the transaction.
The good news for the original owner is that a lot of the time the bank will not bother with handing him a 1099. Banks are in the business of giving out loans, not 1099s or holding properties.
Thank you for your responses. They definetly cleared some things up.
Mike
Your question is rather general... There are scores of posts on this site, as well as essays and articles that can provide the background information that you need.
Suggest you devote 20 or 30 hours in a(FREE) cursory education provided herein on the subject.. as others have done before you.[ Edited by TheShortSalePro on Date 03/20/2005 ]
Contact the lender and ask for the Loss Mitigation Dept. These are Lawyers representing the Bank or Mortgage Co. They will inform you of all the necessary paper work or questions that you may have. You must have a permission form filled out from the seller before they will speak to you about the sellers Mortgage, make sure the form has the
Account numbers and all signatures. Most of the time they will work with you about giving more time but not always.
Good Luck,
Robert