Posted on: 08th Sep, 2009 09:25 am
Hello All,
I am in negotiations with the bank on a short sale for an investment property in California and I heard that you can negotiate everything including not receiving a 1099-C. To my understanding if certain conditions have been satisfied then the bank will show the loan paid in full and no cancellation of debt is required, therefore a 1099-C will not be issued.
Has anyone had any success with this? If so, please explain. Thanks.
I am in negotiations with the bank on a short sale for an investment property in California and I heard that you can negotiate everything including not receiving a 1099-C. To my understanding if certain conditions have been satisfied then the bank will show the loan paid in full and no cancellation of debt is required, therefore a 1099-C will not be issued.
Has anyone had any success with this? If so, please explain. Thanks.
Hi sgarewal,
You can definitely try and negotiate with your lender so that you do not receive a 1099c. But it's the lender's discretion whether or not he would consider your request. You would receive a 1099-c form if your debts are forgiven. If it's not paid in full, I doubt whether or not the lender would report it as "paid in full".
Thanks
You can definitely try and negotiate with your lender so that you do not receive a 1099c. But it's the lender's discretion whether or not he would consider your request. You would receive a 1099-c form if your debts are forgiven. If it's not paid in full, I doubt whether or not the lender would report it as "paid in full".
Thanks
I also have a property in Arizona that is in short-sale. I was told since Arizona is a non-recourse state they will not issue a 1099-C. This sounds to be false and the best course of action would be to foreclose on that property. If I let the property go into foreclosure, they will not issue a 1099-C? Can you confirm. I'm about 45 days away from closing on that one and thinking maybe I should just let it go.
You will need a good Real estate agent who is experinaced with this and they can negotiate this with bank on behalf of you
As far as I know, forgiveness of a non-recourse loan as a result of foreclosure does not lead to the cancellation of debt income.
Whether the home is foreclosed or you proceed with a short sale, you will normally be issued a 1099. A 1099-C will be issued with a short sale, versus a 1099-A with a foreclosure. In either case, they are both treated the same.
The difference is that typically the deficiency will be less in a short sale, compared to a foreclosure.
I hope this helps & if you have any other questions, please feel free to contact me. I've negotiated over 200 short sales in the past two years, and specialize in short sales in Arizona.
Arizona Real Estate Agent
[Email address deleted as per forum rules. Thanks.]
The difference is that typically the deficiency will be less in a short sale, compared to a foreclosure.
I hope this helps & if you have any other questions, please feel free to contact me. I've negotiated over 200 short sales in the past two years, and specialize in short sales in Arizona.
Arizona Real Estate Agent
[Email address deleted as per forum rules. Thanks.]