Tax Consequences Of Short Sale

I hv bn told that when a short sale occurs the financial institution will issue a 1099 to the seller because their indebtedness has bn reduced, which constitutes "income" per irs regulations.
Is this true?

Thank you

Comments(2)

  • bgrossnickle15th March, 2004

    I have been told that the lender can either get a deficiency judgement for the difference or they can issue a 1099.

    If the approval letter says settlement in full they will not get a deficieny but can still issue a 1099.

    Brenda

  • bobabby21st March, 2004

    thank you for yr reply. I've bn out of town and not checked the board. thanks

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