Will I get 1099′d for my foreclosure?
I will be filing a Virginia tax return this year but the property is in Nevada.
The house getting foreclosed on is in Nevada. I lost my job there and moved to Virginia in December of 2008. My Realtor trying to sell the house tells me I wont get a 1099 if its sold as a short sale and I will get 1099′d if it gets foreclosed. Is she telling the truth?
3 Responses
wizjp
12 Feb 2010
chatsplas
12 Feb 2010
NOPE.
If it was your principal residence, you can escape being taxed even if 1099′s.
If you only had the first mortgage, most were without recourse and they don’t 1099 you, as the real estate has to suffice.
But certainly you will be 1099d for any junior liens
Lauren F
12 Feb 2010
It depends on how many mortgages you had on the property. For the first mortgage, you probably won’t be taxed on it. But, if you had a second (or piggy back) mortgage, or a home equity line of credit, those are very often written differently than first mortgages, (nonrecourse loans), and yes, some will send you a 1099 for the lost payoff they didn’t get from you.
Check the language of your loan documents if you had a second or HELOC line with a balance outstanding, then talk with a tax adviser. Also, talk with those lender(s) and ask them to tell you what might happen.
that’s the way it works.