Diane:
Hopefully you can give me some feedback on this...
I was discussing Short Sales with my attorney a ways back.
He indicated that the FOD might be offset by a capital loss.
I've stored this in the back of my head ever since.
Here's how I see it...mainly on commercial or investment property.
The seller bought the place a year ago at $200k and put $20k down.
Bank lent $180k on it, and is now preparing to foreclose for $184k including fees.
I make a Short Sale offer of $150k, which the seller and bank agree to.
The seller gets hit with a 1099 for FOD of $34k ($184 - $150k).
Wouldn't the seller also be able to claim a capital loss of $50k ($200-$150k) to offset the 1099?
I understand this wouldn't work for a residential seller, since there is no capital loss provision I'm aware of.
Thanks in advance for any light you might be able to shed on this.
Hopefully you can give me some feedback on this...
I was discussing Short Sales with my attorney a ways back.
He indicated that the FOD might be offset by a capital loss.
I've stored this in the back of my head ever since.
Here's how I see it...mainly on commercial or investment property.
The seller bought the place a year ago at $200k and put $20k down.
Bank lent $180k on it, and is now preparing to foreclose for $184k including fees.
I make a Short Sale offer of $150k, which the seller and bank agree to.
The seller gets hit with a 1099 for FOD of $34k ($184 - $150k).
Wouldn't the seller also be able to claim a capital loss of $50k ($200-$150k) to offset the 1099?
I understand this wouldn't work for a residential seller, since there is no capital loss provision I'm aware of.
Thanks in advance for any light you might be able to shed on this.
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