Diane Posted August 7, 2009 Report Share Posted August 7, 2009 What are the tax consequences of selling your second home short? Does the bank have to approve a short sale? Will the unpaid debt be taxable? Diane Quote Link to comment Share on other sites More sharing options...
mlinder42 Posted August 8, 2009 Report Share Posted August 8, 2009 What are the tax consequences of selling your second home short? Does the bank have to approve a short sale? Will the unpaid debt be taxable? Diane Sure the bank most approve the short sale.To determine the tax consequences more info is needed. Quote Link to comment Share on other sites More sharing options...
Diane Posted August 8, 2009 Author Report Share Posted August 8, 2009 She would be selling at a loss and will have COD. Right now, the home is her second home. She might be able to rent it; if so, would it qualify for the loss on Form 4797? I'm assuming she will have income on the 1099-C (COD). If sold as her second home, would the loss go on Schedule D? Limit $3,000/year? It seems it would benefit her to convert to a rental, then sell and put on Form 4797. Diane Quote Link to comment Share on other sites More sharing options...
jainen Posted August 13, 2009 Report Share Posted August 13, 2009 >>What are the tax consequences of selling your second home short?<< That depends on how the sale is structured. The bank does NOT necessarily have to approve--a buyer could take it subject to the lien, perhaps as a lease option of some kind or equity sharing. Or the bank might agree to second position to avoid foreclosure. Can't your Realtor come up with ANYTHING better than selling at a rock bottom price for full commission? Quote Link to comment Share on other sites More sharing options...
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