Short Sale - Havent received 1099-C yet for difference.

kingno1 · Joined: 25 Apr 2008 Posts: 56 19.98 Dollars($)

Hello, I short saled my house on Dec 24th 2008 and it got recorded on the same date. I got a letter from my bank saying that my account is paid in full and closed. Will I be expecting 1099-C for the difference. I have savings acct also with the same bank.
I got my 1099-INT form and then the 1098 form for paid mortgage, but did not receive any 1099-C for cancelled debt.
Wondering if they are going to issue me with 1099-C. If so, should I have gotten it already. Should I check with the bank on this? Is it mandatory to send this form in all cases of short sale?
Any suggestions?

jameshogg · Posted: Tue Feb 10, 2009 12:38 am Post subject:

Hi Kingno,

Nice to see you again. Smile

Well, banks usually send in the 1099-C form when they cancel a part of your debt. They get it signed by you and then send this form to the IRS just to let them that they have suffered a loss due to default on your behalf. However, if you satsify certain conditions, you may not have to pay tax on canceled debt.

In your situation especially you son't have to pay tax because the bank has been very supportive. They've stated your loan as paid in full and closed. That's a great thing I believe in times of crisis. Since the bank does not want to declare any unpaid debt as "canceled debt", therefore, you won't get Form 1099-C probably. Just make sure that the lender reports your mortgage as "Paid in full" to the credit bureaus. Pull a copy of your credit report to find out if it says "Paid in full" beside your mortgage debt account.

Just for your clarification, you may have a talk with the lender regarding 1099-C form. But I believe it's not necessary considering that your loan is declared "Paid in full and closed".

Thanks

kingno1 · Joined: 25 Apr 2008 Posts: 56 19.98 Dollars($)

Thanks Jameshogg, I got a form from the closing title company, but that only shows the sale price. If I call up and ask bank about the form, will they think now..oops i forgot, here you go with the form.
Lets say, if they are not issusing me the 1099-C form, then I dont need to gestimate the difference and file a 982 form..right?
I posted this question on all forclosures forum and somebody expressed that I need to gestimate the diff and file it. However I am not convinced with that answer.

kingno1 · Joined: 25 Apr 2008 Posts: 56 19.98 Dollars($)

Hello, My credit report shows as below. Does this mean that bank is not going to report as short sale? Also, does this mean that bank is now reporting it as current and paid?
Experian: Status: Paid,Closed/Current, was past due 120 days.

Equifax: ING DIRECT
Show Details XXXXXXXXX 07/2007 $0 01/2009 $0 PAYS AS AGREED $0

Posted: Fri Feb 13, 2009 4:31 am Post subject:

If the lender short sells your property, it will definitely report it to the credit bureau. I think you have paid the deficient amount resulting from the sale of the property. Thus, your credit report shows "Paid as agreed".

kingno1 · Joined: 25 Apr 2008 Posts: 56 19.98 Dollars($)

Well, My deficiency was 230K. I never paid that. if I can afford that, I wouldnt be short selling the property. I was behind by 4 months of payments and property taxes. Property taxes were paid to county as part of escrow and the remaining amount went to bank. I never paid the past payments to bring it to current. So, was trying to understand the situation and wondering if my bank is being nice to make them current. So, Looking at his on the report, means that my credit history is free of short sale remark?

Guest

Holy crap -- if you got away that easily on your huge deficiency....then consider yourself lucky. I think you should probably check with the IRS and see if they have or have not filed a 1099C. Lately I have been hearing that the consumers/sellers are supposed to do that. You can't just take it for granted that it was not filed.

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