[WSBARP] Short sale versus foreclosure tax issue

Eric Nelsen Eric at sayrelawoffices.com
Fri Apr 11 14:03:03 PDT 2014


Basic questions--If client sells her residence at a short sale and the
bank takes, say, a $40,000 haircut, is that considered forgiveness-of-debt
income to the client that she has to pay taxes on? And does the bank issue
a 1099?

 

And, in comparison to an actual foreclosure--there's never a
forgiveness-of-debt-income issue on a residential nonjudicial foreclosure,
is there? Despite the lack of a deficiency judgment?

 

Sincerely,

 

Eric C. Nelsen

SAYRE LAW OFFICES, PLLC

1320 University St

Seattle WA  98101-2837

phone 206-625-0092

fax 206-625-9040

 

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