Video Summary

How does selling your house affect your income taxes? Well if you sell your house for a loss you don’t’ get to deduct the loss.  If you sell your property for a gain you have to pay long term capital gains on the sale of your property, if you’ve lived there for over a year. If you’ve lived there for less than a year well then you have to pay short term capital gains. 

If you’ve lived in the property for two out of the past five years and you’ve occupied it two out of the past five years you can exempt up to $250,000.00 of gain.  If you owned it as husband and wife you can deduct up to $500,000.00 of gain.  So if you sell your house, you can’t take any losses, and if you have a gain and you’ve lived there for two out of the past five years, you can exempt those from your income and you do not have to pay long term capital gains on the sale.

So if you have any questions about selling your home well give me a call at (727)847-2288.

Video Summary

What is a 1099-C?  It’s an IRS form which is completed by a lender whenever they forgive debt of a borrower.  Usually, a 1099-C is issued whenever you have a short sale, meaning that you sell the property for less than the amount of money owed.  The difference, if the lender forgives it, is shown on the 1099-C, which is reported through the Internal Revenue Service as income.  And if you receive a 1099-C, you need to contact a knowledgeable certified public accountant. You will not necessarily have to pay taxes, and you will be able to subtract your basis if it’s investment property from whatever gain the lender has reported under the 1099-C.

If it has to do with your primary residence, and you get a 1099-C, you may not have to pay any tax likewise, and as an individual you can exempt up to $250,000.00 of gain as far as the sale of your home if you’ve lived in the home for two out of the past five years. Also, if it was the original mortgage and you did a short sale there’s some federal legislation that may also excuse the issuance of a 1099-C. I would also add that many times on a short sale, the lenders don’t necessarily issue 1099-Cs. So if you do get a 1099-C, I suggest that you consult with a knowledgeable certified public accountant and ask them how much you’re going to have to pay or recognize as income.

And if you have any other questions about 1099-C, give me a call at 847-2288.  Thank you.

Video Sumamry

How will a short sale affect my income tax?  Well, there’s any number of questions that have to be answered before I can give you an answer to that question.  The first question is: Is this your primary residence?  If it’s your primary residence, there’s federal legislation involved that may excuse you from having to pay any taxes on the sale of your home.  If you have the original mortgage and you’re short selling, then the lender will not send you what they call a “1099-C”, which is a report to the Internal Revenue Service that you’ve experienced gain from the sale of your house and therefore, you may be obligated to pay income tax on the long-term capital gains.

If you do receive a 1099 for the sale of your residence, then you may not have to pay taxes. You have to file a tax return and show the sale.  However, if you’ve lived in your home two out of the past five years and own the home during that period of time, then you could exempt up to $250,000.00 of gain and that usually eliminates the problem.

Now, let’s say that this is not your primary residence and this is investment property.  Well, then if you have a short sale and the lender sends a 1099 to you, then you will have to pay long-term capital gains.  You may also have to recapture the deductions for your depreciation that you’ve taken on your rental property.  So the best thing to hope for on all these situations if it’s not your primary residence is they don’t send you a 1099 and you take that up with your accountant on how you should report the transaction.

Also, another problem that I’ve been seeing some of my clients experience is a 1099-A and that says the property’s been abandoned and I’m really not sure just how the accountants are treating it because your debt may not be forgiven and they still send this 1099-A to you.

So if you have any more questions about it, give me a call.  I’d be glad to talk to you about it. My phone number is (727) 847-2288.  Thank you.

Video Summary

How does a mortgage foreclosure affect your income taxes?  Well, it should not affect your income taxes because the lender has not forgiven any of the debt on your loan after they conclude a mortgage foreclosure, so you should not receive a 1099-C, which is a report to the Internal Revenue of how much debt has been forgiven.  So therefore, you should not have any tax consequences as a result of a foreclosure action.

I have seen lenders send out what they call a 1099-A and that is a report to the Internal Revenue Service that the property has been abandoned.  That doesn’t mean that the debt has been forgiven and therefore, I am uncertain as to how the accountants are dealing with 1099-A’s whenever your property has merely been foreclosed.

So if you have any other questions about a 1099-C or a 1099-A, please give me a call at (727) 847-2288 and we can discuss it.  Thank you.