Posted on: 11th Mar, 2010 06:03 am
It is regarding my investment property here in GA that I did a short sale on last year.
My PMI company paid the difference so that my mortgage was paid in full. My question is, what do I recognize as the sale price and what do I recognize as the gain/loss. The short sale price or the balance of the loan?
I didn't get a 1099 from the mortgage company and they said they will not be sending me one since the PMI company paid the difference.
For example:
Property loan balance is $50K
Short sale is $40K
PMI paid $10K
--What is the sale price?
--What is the capital loss/gain?
My PMI company paid the difference so that my mortgage was paid in full. My question is, what do I recognize as the sale price and what do I recognize as the gain/loss. The short sale price or the balance of the loan?
I didn't get a 1099 from the mortgage company and they said they will not be sending me one since the PMI company paid the difference.
For example:
Property loan balance is $50K
Short sale is $40K
PMI paid $10K
--What is the sale price?
--What is the capital loss/gain?
Hi Maria,
You do not have any gain from the short sale of the home. Generally, if your property sells for an amount less than what you owe and the lender forgives the difference, it will be considered as your income. You will owe taxes on this forgiven debt amount. But in this case, there has not been any deficiency from the sale of the home as the insurance company has paid off the difference. Thus, the sale price would be $40k as per the example. But the lender would not send you a 1099C form and you do not have any gain or loss from the short sale of the property.
You do not have any gain from the short sale of the home. Generally, if your property sells for an amount less than what you owe and the lender forgives the difference, it will be considered as your income. You will owe taxes on this forgiven debt amount. But in this case, there has not been any deficiency from the sale of the home as the insurance company has paid off the difference. Thus, the sale price would be $40k as per the example. But the lender would not send you a 1099C form and you do not have any gain or loss from the short sale of the property.