Short Sale Tip # 7: Confronting The 1099 Issue In Short Sales

Short Sale Tip # 7: Confronting The 1099 Issue In Short Sales

Can you imagine losing your home AND being hit with a huge IRS bill?
Well if the short sale is not performed correctly and the short sale proposal request is not properly formatted, you may end up sticking the homeowner with a huge and possibly overwhelming tax burden from which they may never recover. 

I would not want to be on the other end of that lawsuit when the homeowner comes calling!

Often times, a lot of real estate agents and even more homeowners are unaware of the difference between the 1099 issue and the possibility of a deficiency judgment. That difference is explained in tomorrow’s installment of the Short Sale Tip Series but in confronting the 1099 issue there are two very important things to know.

1. The Mortgage Forgiveness Debt Relief Act of 2007 relieves the homeowner of any potential liability in regards to the shortfall that may occur in a short sale. However, for the most part, this only applies to foreclosures on primary residences.

2. All is not lost on the investment property or second home if the borrower can prove insolvency. The threshold for proving insolvency is much lower than qualifying for bankruptcy. Basically if one’s debts verifiably exceeds their assets they may be absolved with the use of the IRS Form 982.

This may be too complicated for an agent to be involved in and we do not recommend an agent give accounting advice but you can indeed advise the borrower to seek out the counsel of a CPA or tax attorney to see if the IRS Form 982 can help them avoid a possible 1099.

WARNING: Do not let an uneducated agent, broker or advisor tell you otherwise…you can not be issued a 1099 AND a Deficiency judgment. Stand firm and we’ll discuss this tomorrow but these two animals don’t cross paths. Don’t be fooled by those who tell you they do.

At our seminar, we show you how to properly format the short sale request so that the homeowner is not saddled with a large tax burden.

Click Here For A Free Downloadable Copy In Our Free Forms & Documents Section

At our seminar, we show you how a hardship letter is to be written and what information must be contained in the letter when it is submitted as a part of the overall short sale package.

If you are ready to take the next step in your real estate career and want to learn how to profit from foreclosures, make sure you enroll in one of our upcoming Pre-Foreclosure / Short Sale Seminar Workshops.

You will learn how the foreclosure process works and how you can profit from this growing market. Instead of thinking that the market has turned against you, get educated and learn how to take advantage of this unbelievable opportunity for the educated real estate industry professional.

See our video below to see what some of our past attendees had to say about the Ultimate Pre-Foreclosure & Short Sale Seminar!

This seminar presentation is unlike any other short sale seminar on the market. Many of our attendees have taken the class 3 and 4 times or more!

90% of our seminars sell out in advance.

If you feel that you can become a short sale expert by taking a rip-off imitation seminar or a free board seminar, then you are really missing the boat on short sale opportunities!

For more information on the 2008 Ultimate Pre-Foreclosure & Short Sale Seminar Series, please call us at 954-566-0923.

Other Posts you may find Interesting...

• Short Sale Tip #13 : 5 Questions To Ask The Seller…Before Taking The Listing For a Property in Foreclosure
• Short Sale Tip # 9: The Role Of Mold In Obtaining A Big Short Sale Discount
• Short Sale Tip # 4: Property Improvement & Repair Estimate Report
• Short Sale Tip # 3: The Hardship Letter
• Short Sale Tip #10 Overcoming Objections with the Homeowner