Comment

Comment by Clay Kime on April 21, 2011 at 10:29am

Hi Pauline,

 

As far as I know, you should still be exempt from any tax through the The Mortgage Forgiveness Debt Relief Act, provided it was your principal residence.  You will get a 1099-C, but you can concurrently file the exemption forms to avoid any tax liability.

 

If the property was an Income Property, your accountant should be able to take the Full, realized depreciation: Acquisition cost (minus any previously claimed depreciation) less the final REO sales price) on Schedule E.  This should nearly or entirely offset the 1099-C gain.

 

Hope that helps.

Comment by Pauline Fernandez on April 19, 2011 at 10:01am

I had a short sale last year (My own thru another realtor)--Lost it to the bank and now I have a 100K$ earned income in a form of a 1099 from the servicer.  Do I need to pay IRS taxes on that--I asked my tax person and he was not sure---can anyone make a comment?  The servicer did not accept an offer and when it became an REO, it sold for less then the contract they declined from my agent, as a short sale.  What gives?