Tax Implications from Fairfax VA Loan Modifications, Short Sales and Foreclosures

Fairfax, VA – If you’ve recently survived a Fairfax foreclosure, deed-in-lieu of foreclosure, short sale or loan modification, you’re probably feeling pretty beat up and worn-out. It’s an arduous procedure that the financial institutions seem to drag out as much as possible.

I wish I could tell you that you’re through with the issues from the upside down real estate you just tidied up. There’s one more subject – taxes.

That’s because the financial institutions are known for not following the rules.

If you have a house picked up in a Fairfax foreclosure, you’re supposed to get a Form 1099-A. You’re fortunate if they even fashion a Form 1099-A (for some excuse, a lot of the banks our readers have dealt with don’t seem to even grasp the basic guidelines for a foreclosure). And then, there’s a possibility that they will send it to the address of the property that isn’t yours anymore.

If you had a Fairfax VA home foreclosed on or did a deed-in-lieu-of foreclosure, you should get a Form 1099-A by January 31st of the year following. If you don’t get the form, call them and ask for it. You may find that they avoid to talk to you unless you bring the record current. Or you might find that they assume they don’t owe you a Form 1099-A.

In both cases, they’re wrong, but what are you going to do about it?

•PROBLEM: No Form 1099-A, and there should have been one.

Consult with an EXPERIENCED tax specialist first to confirm you really should have inheritedacquiredobtained) a Form 1099-A.

If you should have, and didn’t, ask the lender. Hopefully they can get you a copy out in the mail immediately.

If they won’t grant you a Form 1099-A and they should have, there really isn’t anything to report unless there is Cancellation of Debt (next item). BUT, make a comment of it in an attached statement to your tax filing. If there’s reporting you should have done and didn’t or couldn’t because they didn’t do what they were obligated to do, make sure the IRS and your state are on notice that it’s not your omission.

•PROBLEM: Form 1099-A delivered with incorrect information or in error.

If you receive a Form 1099-A that’s got incorrect information, contact the lender. If they won’t issue you a corrected form, the IRS claims you’re supposed to contact them.

•PROBLEM: Form 1099-A sent, but no Form 1099-C.

If you think you should have received a Form 1099-C (because you had Cancellation of Debt) and didn’t, contact the bank. If they won’t give you one or you are given the run-around, then one of three things has transpired:

(1)You didn’t actually have Cancellation of Debt (COD).

(2)The financial institution is aware you have a Form 982 exclusion.

(3)The lender doesn’t know what they’re talking about.

Of all of those, I think #3 is the issue I hear about all the time.

If you and your experienced tax/legal advisor think that you did undoubtedly have COD, then report the income as additional income or on Form 982 using your estimate of Fair Market Value or the amount reported on Form 1099-A.

Are you interested in selling your house as a Fairfax short sale? Call me at (703) 322-0600 for a free consultation. When you call, I will explain how the process works in detail and answer any questions you may have. Discover how others with Fairfax VA homes for sale have successfully completed a short sale and request your free consultation.

Thinking about a loan modification? Our Fairfax loan modification kit has the instructions you will need to get a loan modification approved with your lender.

Thanks for reading this, Thierry Roche.

Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, ‘Inside Real Estate’

Phone: (703) 322-0600

Thierry@ThierryRoche.com

Thierry Roche specializes in loan modifications and short sales in Fairfax Virginia. Fairfax Loan Modification Help. Fairfax Short Sales. Fairfax Short Sale Realtor. Fairfax County Short Sale Realtor. Fairfax VA Short Sales.

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