Archive for the ‘1099c’ Category

Connection Between Short Sales And Bankruptcy

Saturday, June 23rd, 2012

While most of us expend a large amount of time discussing foreclosures, we forget to take under consideration the property owner may also be filing for bankruptcy at the same time. An important question asked is, which comes first? Is foreclosure the reason behind bankruptcy, or is it bankruptcy that leads to foreclosure? To contribute to the complexities, a new phrase has been added, and that is short sales. In 2008, the government had resorted to loan alterations to bail folks out.

Nevertheless, this was a total flop, being that only 4% of home owners were able to fill out an application for it. With no alternatives, lenders allowed home owners to sell their properties at a lower price than what they really owed. This kept the debtors from the intricacies of foreclosure, and saved the bank’s time from legal red tape techniques. This helped a bit.

For most homeowners who are striving a lot to keep up, making a bankruptcy filing is pertinent. For a lot of them, there aren’t any interested purchasers that wish to offer the full value of the home, which may ultimately lead to . Thus, those who have already filed for a bankruptcy, this concept is indeterminate. If they do this, they will be harassed with a number of other legal issues after filing for their bankruptcy.

Short sales will cause your credit score to take a blow. On top of that, you are responsible for a 1099C, a taxable event that is more of a self-imposed burden. Last but not least, all the time that you have dedicated will be for nada. The prize will be for the person that actually takes over your property.

So protect yourself from all of the headaches, and refrain from a foreclosure problem along with your bankruptcy filing. Make the world a little more simple.

, founder and Manager of , spends a large amount of his time aiding people impacted by the present debt and housing emergency.

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What Is The Difference Between A 1099A & 1099C

Thursday, September 29th, 2011

 

There seems to be a ton of confusion as to what to do with the 1099A  after you got rid of your . That you more or less did by losing your home at the same time in the form of a foreclosure or a short sale.  Not to mention the 1099C that you may get as well. So hopefully this will clear it up a little.  But when you do get your forms do save them and do bring them to your tax advisor to see how they may help you filing them correctly.  There are a ton of homes in the market just like many other markets where the homes ended in foreclosure or a short sale.A 1099A hopefully followed by a 1099C is what the previous home owners would be getting.But please understand that this blog is only informational and for specific situations you need to consult your tax preparer.

In essence, your 1099A is a receipt from your lender saying that you have taken your home back.Though its just that it is not a taxable later that would come later. Whenever you get a 1099.

1) If the home that was foreclosed was in no way an investment property or a rental but your principle residence.Due to the Mortgage Foregiveness Debt Relief Act of 2007, the difference form what you owed to what the bank sold your home will not involve a taxable event. But this act may not be valid after December 31, 2012 as that is when it expires.

2) If you are insolvent when your debt is being cancelled, you do not have to pay taxes so that is when you should see your tax advisor.Insolvency is the situation where you have more debt than assets and so you would have to submit an IRS form 982 to prove your insolvency.

3) If you need to use it, it should be your last resort because debt is cancelled only because of bankruptcy.

Selling these homes in a foreclosure or a short sale would usually lead to these homeowners recieveing a 1099A.Always remember that a 1099A is nothing but a reciept from your lender saying that they have accepted your property as a partial satisfaction for the debt your owed.  But the 1099A is not going to be the documentary evidence of cancellation of debt that you need to file with your tax return. The cancellation of debt is because more than likely you owed more on the home than it was worth.So the fact is that there is still a balance owning on the loan.The 1099A is nothing but a neutral tax document.

The 1099C informs you as well as the IRS about the amount of the cancellation of debt. To some, the 1099C can mean trouble.

To find out if you will have a taxable event or not, you will have to work with your numbers. Depending on two things which is the dollar amount that is cancelled by your bank and whether you have more liabilities than assets.

Here is where the real problems start. Is getting that 1099C issued to you so you can do your tax return and not have to worry about that phantom income that the IRS would love to tax you on. Consider that you owed $500,000.00 on a home which the bank sold for $250,000.00 so the amount of your phantom income would be $250,000.00. There have been many home owners in the market that have been forced in Bankruptcy just for this one simple thing. Everay situation is different so contact your legal por tax professional for your specific situation.

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