Short Sales or Foreclosure – Tax Issues & 1099s
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Home equity lines and investors be sure to consult your CPA prior to considering a short sale or foreclosure. The IRS wants you to pay and you must have great tax planning and strategy to minimize your risk and lower your tax burden. The tax laws change so frequently that you MUST not depend on a realtor for this advice. You must consult a tax expert.
If you can prove you were insolvent prior to the close of a short sale this is better. When you access your balance sheet and consider your assets and liabilities they do not consider your retirement as part of your assets. That said these guidelines change and you need to consult a CPA to assess your tax burden and put together a balance sheet.
If you have tax consequences after a short sale you would have owed in foreclosure to. We all would love to say you can wipe your tax burden away by letting a home go but in some cases you can’t.
For now if the home was a purchase money primary home the tax scenario is different than if you are an investor or have a home equity line that is not purchase money.
Knowing your options is important. The IRS is not always out of the picture after the home is gone.
