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1099 and Tax Question?
I noticed that alot of people are sending out false information about 1099s and the amount owed on foreclosures after it sells for less. If you're unaware, George Bush passed a law on December 20th that was on the front page of almost every paper stating that debt owed on a short sale or a foreclosure and a 1099 will not be owed because of the housing crisis until December 31, 2009. Tell me if I'm wrong, positive answers only please.
1 Answer
- oakhillLv 61 decade agoFavorite Answer
The old tax law counts cancelled mortgage debt on primary residences as taxable income. The new law provides temporary relief to ensure that cancelled mortgage debt on a primary residence is not counted as income. It does not cover "debt owed on a short sale or a foreclosure", which is a different matter. For example, if you owed $100,000 on your house, it was foreclosed and it was sold for $80,000, you would be taxed on the $20,000 difference under the old laws. Now, you will not be taxed on the $20,000.
