User question: I have been working with a realtor for a year attempting to sell or short sell my condo after losing my job. Finally BOFA has accepted a short sale offer that has been made but indicates they will be sending me a 1099 tax form. My question is, what exactly does that mean? Am I to pay taxes on the amount written off as if it were income? If so, do I have any recourse? I was out of work for over 8 months and am now working for a temporary agency making barely enough to survive on.
Answer from blueroof.com: It is extremely common for the banks to send a 1099 for the amount of money forgiven. While the answer to your question is yes you will have to report this on your tax return, in some circumstances, you can dramitically reduce or even eliminate the tax liability involved with this.
However, not being a tax professional, I am unable to advise you on how to do this. The best thing I can tell you is to speak to several different tax professionals, or tax attorneys, to discuss your options and how to best handle the situation. If you would like the contact information for one that we have worked with we will be happy to provide you with that. Just let us know.
As a side note, since we are at the end of the year, if the home doesn't close until January, you wouldn't get the 1099 this year and it wouldn't even show up until the next year. I don't know when it is supposed to close but that is something to take into account as well.
Managing Broker for Blue Roof Realty
Please note that ABC15.com, and its paying advertiser blueroof.com which answered this question, are not qualified to offer tax advice and the best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.
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