Updated over 15 years ago on . Most recent reply
Short Sale 1099 for taxes???
If a person does a short sale and receives a 1099 as if they collected money.. the difference between whats owed and the short sale price... Is there not tax implications?
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Jon Holdman
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Jon Holdman#3 Real Estate Deal Analysis & Advice Contributor
#3 Real Estate Deal Analysis & Advice Contributor
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If its a personal residence and the forgiven debt was used for buying or improving the property, the seller may be able to avoid taxes. If the forgiven debt was a HELOC used to buy nice vacations and expensive toys, then its still taxable.
If you borrow money, spend it, and don't pay it back, that sure sounds like income to me. There's no "as if they collected money" to it. They DID collect money, even if that money went to pay for the house.