QUESTION
Would the IRS come after the difference if I short sell?
Asked on Jun 12th, 2015 on Taxation - Ohio
More details to this question:
I am thinking about short selling my house. If I do, will the IRS 1099 me for the difference between what I owe and the sale price? Thank you.
2 ANSWERS
That would be a yes.
Answered on Aug 27th, 2015 at 7:11 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The IRS won't 1099 you but the lender certainly will. ?You will be taxed on the difference between the loan balance and the net proceeds of the short sales. ?So if the loan is $90,000 and the house sells for $65,000 with $5,000 of closing costs, you'll be taxed on $30,000. ? If the short sale is done as part of a bankruptcy, it's tax free. ?If you are insolvent at the time of the short sale, part or all of the gain will be tax free. ?You should consult a tax lawyer to find out how the taxes apply in your situation.
Answered on Jun 15th, 2015 at 12:40 AM