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Posted: 4/2/2015 1:35:00 AM EDT
[#1]
I think PMI is for foreclosure only but I could be wrong.
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Posted: 4/2/2015 1:36:20 AM EDT
[#2]
Everyone's situation and state is different. You need to get in front of a tax attorney and an accountant. You are going to get 20 different answers here.
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Posted: 4/2/2015 1:40:33 AM EDT
[#3]
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it.
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Posted: 4/2/2015 1:49:20 AM EDT
[#4]
Quote HistoryQuoted:
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it. So that means that the mortgage company can not seek a judgement for the deficit? |
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Posted: 4/2/2015 1:53:03 AM EDT
[#5]
Quote HistoryQuoted:
So that means that the mortgage company can not seek a judgement for the deficit? Quote HistoryQuoted:
Quoted:
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it. So that means that the mortgage company can not seek a judgement for the deficit? Not if they agreed to the short sale. If you didn't get it in writing they can in some states. |
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Posted: 4/2/2015 1:55:13 AM EDT
[#6]
See a lawyer. You're going to want to get it in writing that the lender is accepting the short sale amount as a settlement in full of the debt amount owed and will not pursue the difference after the fact.
Quote HistoryQuoted:
So that means that the mortgage company can not seek a judgement for the deficit? Quote HistoryQuoted:
Quoted:
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it. So that means that the mortgage company can not seek a judgement for the deficit? |
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Posted: 4/2/2015 1:59:40 AM EDT
[#7]
Quote HistoryQuoted:
So that means that the mortgage company can not seek a judgement for the deficit? Quote HistoryQuoted:
Quoted:
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it. So that means that the mortgage company can not seek a judgement for the deficit? That's incorrect. They have to accept the short sale and then they can still come after you for the difference. The good news is they aren't selling the house at auction and coming after you for that difference. PMI isn't protecting you, it's protecting the lender. |
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Posted: 4/2/2015 2:10:59 AM EDT
[#8]
I had to short sell a house in 2012. From day one I worked with the lender, made sure I jumped through all their hoops, dotted the "i's" and crossed the "t's". Since I had their blessings, the bank said they were happy and wouldn't come after me for the deficit ($50K).
However, come tax time the following year, I get a 1099 from the bank for $50K of "forgiven debt". The IRS considered it "income", and I had the pleasure of paying $16K of taxes on income I never received! Sucked big time, believe me. I was just lucky I had the funds to pay. So be advised, there are plenty of potential "got'cha's" just waiting to bite you in the butt. Get a tax lawyer so you're well prepared. Just my two cents. |
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Posted: 4/2/2015 2:14:06 AM EDT
[#9]
Quote HistoryQuoted:
That's incorrect. They have to accept the short sale and then they can still come after you for the difference. The good news is they aren't selling the house at auction and coming after you for that difference. PMI isn't protecting you, it's protecting the lender. Quote HistoryQuoted:
Quoted:
Quoted:
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it. So that means that the mortgage company can not seek a judgement for the deficit? That's incorrect. They have to accept the short sale and then they can still come after you for the difference. The good news is they aren't selling the house at auction and coming after you for that difference. PMI isn't protecting you, it's protecting the lender. It is only a taxable event if the lender is forgiving the debt....i.e. Releasing you from your obligation to pay. Generally by the very nature of a short sale that is what happens. |
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Posted: 4/2/2015 2:17:55 AM EDT
[#10]
Quote HistoryQuoted:
I had to short sell a house in 2012. From day one I worked with the lender, made sure I jumped through all their hoops, dotted the "i's" and crossed the "t's". Since I had their blessings, the bank said they were happy and wouldn't come after me for the deficit ($50K). However, come tax time the following year, I get a 1099 from the bank for $50K of "forgiven debt". The IRS considered it "income", and I had the pleasure of paying $16K of taxes on income I never received! Sucked big time, believe me. I was just lucky I had the funds to pay. So be advised, there are plenty of potential "got'cha's" just waiting to bite you in the butt. Get a tax lawyer so you're well prepared. Just my two cents. Dude, so if I gave you $50k as a loan and then told you you didn't have to repay me, didn't you just recieve a $50k gift/income? Same principle applies when a short sale occurs. You are recieving a $50k benefit of NOT having to repay the money, therefore it is taxable income. Pretty simple concept buddy. 
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Posted: 4/2/2015 2:19:09 AM EDT
[#11]
How can they come after the deficit and I still have to report it as taxable income with a 1099c? Isn't that like double dipping?
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Posted: 4/2/2015 2:23:05 AM EDT
[#12]
Quote HistoryQuoted:
It is only a taxable event if the lender is forgiving the debt....i.e. Releasing you from your obligation to pay. Generally by the very nature of a short sale that is what happens. Quote HistoryQuoted:
Quoted:
Quoted:
Quoted:
If you short sold a house the amount of the mortgage you were short is a taxable event as debt forgiveness and you will get a 1099c from the lender for it. So that means that the mortgage company can not seek a judgement for the deficit? That's incorrect. They have to accept the short sale and then they can still come after you for the difference. The good news is they aren't selling the house at auction and coming after you for that difference. PMI isn't protecting you, it's protecting the lender. It is only a taxable event if the lender is forgiving the debt....i.e. Releasing you from your obligation to pay. Generally by the very nature of a short sale that is what happens. I wasn't disagreeing with you, sorry I should have specified that. 
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Posted: 4/2/2015 2:29:37 AM EDT
[#13]
Quote HistoryQuoted:
How can they come after the deficit and I still have to report it as taxable income with a 1099c? Isn't that like double dipping? They can't. They have to forgive the debt in order for it to be taxable. No forgiveness, no 1099c |
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Posted: 4/2/2015 2:35:38 AM EDT
[#14]
Quote HistoryQuoted:
I had to short sell a house in 2012. From day one I worked with the lender, made sure I jumped through all their hoops, dotted the "i's" and crossed the "t's". Since I had their blessings, the bank said they were happy and wouldn't come after me for the deficit ($50K). However, come tax time the following year, I get a 1099 from the bank for $50K of "forgiven debt". The IRS considered it "income", and I had the pleasure of paying $16K of taxes on income I never received! Sucked big time, believe me. I was just lucky I had the funds to pay. So be advised, there are plenty of potential "got'cha's" just waiting to bite you in the butt. Get a tax lawyer so you're well prepared. Just my two cents. Btw, depending on your level of financial sophistication, a tax attorney is probably unnecessary. If in doubt err on the side of caution and talk with a CPA or tax attorney. Though to be honest and not trying to rip you, if you are seeking tax advice from ar15.com, you probably have your answer on if you feel comfortable dealing with this yourself. |
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Posted: 4/2/2015 3:03:54 AM EDT
[#15]
Quote HistoryQuoted:
I had to short sell a house in 2012. From day one I worked with the lender, made sure I jumped through all their hoops, dotted the "i's" and crossed the "t's". Since I had their blessings, the bank said they were happy and wouldn't come after me for the deficit ($50K). However, come tax time the following year, I get a 1099 from the bank for $50K of "forgiven debt". The IRS considered it "income", and I had the pleasure of paying $16K of taxes on income I never received! Sucked big time, believe me. I was just lucky I had the funds to pay. So be advised, there are plenty of potential "got'cha's" just waiting to bite you in the butt. Get a tax lawyer so you're well prepared. Just my two cents. Let's say they loan your $300K which you used to buy a house. Instead of paying back $300K (plus the interest which you deducted from your taxes every year anyway) you sell the house short & pay the bank back $250K. The bank wrote off a $50K loss (less profit = less taxes paid) on the money that you received & spent - it is no longer a "loan" it is "income." The IRS wants theirs. I suppose it is also a deterrent to keep people from deliberately taking & defaulting on loans. |
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Posted: 4/2/2015 3:05:42 AM EDT
[#16]
Quote HistoryQuoted:
How can they come after the deficit and I still have to report it as taxable income with a 1099c? Isn't that like double dipping? I don't think they can because a short sale is releasing you from the debt. |
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Posted: 4/2/2015 5:55:40 AM EDT
[#17]
Quote HistoryQuoted:
I had to short sell a house in 2012. From day one I worked with the lender, made sure I jumped through all their hoops, dotted the "i's" and crossed the "t's". Since I had their blessings, the bank said they were happy and wouldn't come after me for the deficit ($50K). However, come tax time the following year, I get a 1099 from the bank for $50K of "forgiven debt". The IRS considered it "income", and I had the pleasure of paying $16K of taxes on income I never received! Sucked big time, believe me. I was just lucky I had the funds to pay. So be advised, there are plenty of potential "got'cha's" just waiting to bite you in the butt. Get a tax lawyer so you're well prepared. Just my two cents. If it's your primary home, you can fall under the debt forgiveness act, and the IRS does not tax you on that deficit. That ran from 2007 to 2014. It may get extended to cover 2015 also. I short sold the condo I was living in in 2012, and escaped your fate. if the house you sold was your primary home, you need to find and choke your accountant, and then find a new one to readjust your 2012 tax filings. |
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Posted: 4/2/2015 7:46:56 AM EDT
[#18]
Quote HistoryQuoted:
I don't think they can because a short sale is releasing you from the debt. Quote HistoryQuoted:
Quoted:
How can they come after the deficit and I still have to report it as taxable income with a 1099c? Isn't that like double dipping? I don't think they can because a short sale is releasing you from the debt. Right they will not come after you... But if you simply sell your house for less than you owe the bank then you can count on them coming after the remainder if you didn't get a short sale agreement with them in writing. |
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Posted: 4/2/2015 8:36:35 AM EDT
[#19]
Geez, more moronic real estate advice.....
This is right up there with Buyer's Agents are worthless. The bank issues a 1099 so that they can account for the loss on their books. You receive the 1099 because you were the beneficiary of their loss. Your accountant should report your loss on the sale of an investment, which would usually be equal to or even greater than the amount on 1099. You let accountants handle complex tax issues don't you? FYI, they are not all equal just like real estate agents and doctors |
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Posted: 4/2/2015 8:44:48 AM EDT
[#20]
Quote HistoryQuoted: Geez, more moronic real estate advice..... This is right up there with Buyer's Agents are worthless. The bank issues a 1099 so that they can account for the loss on their books. You receive the 1099 because you were the beneficiary of their loss. Your accountant should report your loss on the sale of an investment, which would usually be equal to or even greater than the amount on 1099. You let accountants handle complex tax issues don't you? FYI, they are not all equal just like real estate agents and doctors |
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Posted: 4/2/2015 8:46:26 AM EDT
[#21]
Quote HistoryQuoted:
I was going to say...if you were in a short sale situation and you get the short sale approval from the bank where you end up selling the house for 50-100k less than you purchased it for, wouldn't the capital loss on the house make up for the 1099 from the bank for the debt forgiveness? Quote HistoryQuoted:
Quoted:
Geez, more moronic real estate advice..... This is right up there with Buyer's Agents are worthless. The bank issues a 1099 so that they can account for the loss on their books. You receive the 1099 because you were the beneficiary of their loss. Your accountant should report your loss on the sale of an investment, which would usually be equal to or even greater than the amount on 1099. You let accountants handle complex tax issues don't you? FYI, they are not all equal just like real estate agents and doctors Usually yes. |
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Posted: 4/2/2015 8:47:52 AM EDT
[#22]
Quote HistoryQuoted: If it's your primary home, you can fall under the debt forgiveness act, and the IRS does not tax you on that deficit. That ran from 2007 to 2014. It may get extended to cover 2015 also. I short sold the condo I was living in in 2012, and escaped your fate. if the house you sold was your primary home, you need to find and choke your accountant, and then find a new one to readjust your 2012 tax filings. Quote HistoryQuoted: Quoted: I had to short sell a house in 2012. From day one I worked with the lender, made sure I jumped through all their hoops, dotted the "i's" and crossed the "t's". Since I had their blessings, the bank said they were happy and wouldn't come after me for the deficit ($50K). However, come tax time the following year, I get a 1099 from the bank for $50K of "forgiven debt". The IRS considered it "income", and I had the pleasure of paying $16K of taxes on income I never received! Sucked big time, believe me. I was just lucky I had the funds to pay. So be advised, there are plenty of potential "got'cha's" just waiting to bite you in the butt. Get a tax lawyer so you're well prepared. Just my two cents. If it's your primary home, you can fall under the debt forgiveness act, and the IRS does not tax you on that deficit. That ran from 2007 to 2014. It may get extended to cover 2015 also. I short sold the condo I was living in in 2012, and escaped your fate. if the house you sold was your primary home, you need to find and choke your accountant, and then find a new one to readjust your 2012 tax filings. This... You really need to look into that. |
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Posted: 4/2/2015 10:18:08 AM EDT
[#23]
Quote HistoryQuoted: I don't think they can because a short sale is releasing you from the debt. Quote HistoryQuoted: Quoted: How can they come after the deficit and I still have to report it as taxable income with a 1099c? Isn't that like double dipping? I don't think they can because a short sale is releasing you from the debt. |
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