How Will A Short Sale Effect My Taxes?
- If your house is worth less than you owe and you sell it in a short sale, the bank will issue you a 1099 for the forgiveness of indebtedness.
- You would usually have to pay taxes on that forgiveness of indebtedness to the IRS but there is an exemption if it is your principal place of residence and you’re insolvent so you won’t have to pay any income taxes to the government.
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