A short sale is simply a sale where the homeowner owes more on the property than it’s currently worth and so the lender must approve the loss before the sale can proceed. The lender’s loss becomes “income” for the homeowner, and at the end of the year, the lender issues a 1099.
Under a 2007 law that expires Dec. 31st, most taxpayers are able to exclude from taxable income the amount of forgiven or cancelled debt. Following that date, forgiven debt will be required to be reported as taxable income.
Although Dec. 31st may seem like a long time away, it’s around the corner in short sale terms. Some banks have improved their short sale processing, but others still take months to review and approve short sale packages.
If you’d like more details on how a short sale works or would like to speak to a Long Beach real estate agent who specializes in short sales, feel free to call our office at 562-896-2456 or email Info@ShowMeHome.com. Shannon has been certified as a CDPE (Certified Distressed Property Expert) and PSC (Pre-Foreclosure Specialist Certification) and has successfully helped many Long Beach area homeowners with short sales.