The Tax Professional & Your Short Sale Transaction

by Martin Casper on Jan.25, 2010, under Real Estate & Short Sales

Short Sales are challenging enough without bringing a qualified CPA to the table. Often times, real estate agents in the name of trying to provide good service, step into areas that they should avoid. One of these areas is anything to do with taxes. It is one thing to give a client a copy of the Mortgage Debt Relief Act of 2007, along with specific directions to get to areas of the IRS.gov site that deals with the tax ramifications of Short Sales & Foreclosures. It is quite another to tell the client that under no circumstances will they be liable for the 1009-C that will be submitted by the lender.

I always recommend that my clients seek the counsel of their CPA prior to going through a Short Sale transaction. If they choose not to seek that guidance, that is a choice that they must make and be responsible for any potential tax issues after the fact. There are many issues that can surround a Short Sale transaction depending on the financial status of the seller.

The Mortgage Debt Relief Act, the 1009-C, the form 982, etc…, etc… are pathways set up to help the client get through this challenging time with as minimal financial pain as possible. Understanding the subtleties of the law is for a professional. It is their job to protect you, the seller, throughout this process and empower you to become financially whole again.

Ask yourself this…is it worth the risk? Do you feel confident that you understand the legal aspects of this type of transaction to the point that you are empowered to handle any potential tax challenges?

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4 Comments for this entry

  • florida plumbers
    February 17th, 2010 on 11:09 am

    I can only imagine the frustration these two will feel when all the hard work, hours of budget examination, identification of possible spending reductions, and list of reccomendations meets the harsh reality of being thrown into the trash can by a congress and administration unwilling to make the difficult spending decisions. This commission will be a joke. IMO, this is simply theatrics by the administration for images purposes only. The spending will not stop, the increases in spending will not be reduced unless there is a significant force/crisis/meltdown that leaves no other option than to reduce spending to a level equivalent to tax revenue. Unless that happens all this commission is, lip service to the common citizen.

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  • Martin Casper
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