Its tax time again, yippie do, right?
Well if you have completed a Short Sale in the past year you will get a very important form from the mortgage company that allowed the sale….THAT YOU CANNOT IGNORE.
The 1099-C is a special income tax form that essentially means YOU a homeowner who sold their home at a loss because of financial hardship, SOMEHOW had extra income for the year. HOW SO?
The "C" stands for cancelation of debt, or also known as debt forgiveness.
Mr. Homeowner short sells his home for $100,000 but owed the mortgage company $150,000, he will get a 1099-C of $50,000 as taxable income. Wait one second before you puke on your shoes
Mr George W Bush, while in office passed what is known as the Mortgage Debt Forgiveness Act of 2007 . Click the link to read the IRS page on how to qualify. But basically, if it was a primary residence then the homeowner will not be subject to this taxable income. This bill is valid until 2012, so rest easy and take this 1099-C to your personal Tax Professional and they will help you file it properly.
*This is for entertainment purposes only and not to be construed as legal or tax advise.