We have a short sale listing in Las  Vegas with full short sale approval from lien holder. Great right? It was great till the seller went to sign the approval letter where it stated that the lender would 1099 him for the difference.

We make clients well aware at the on set that there could be tax ramifications when doing a short sale. We are real estate agents in Las Vegas and can’t give legally give tax advice. We have specific form that clients sign at the listing of the home that states this very thing.

Bush’s bill in November of last year allowed home owners to sell their primary residence on a short sale with tax ramifications. In other words there is no 1099 issued for the sale of your home on a short sale. Investment properties are a different story. The lenders will issue or at least state they are going to issue a 1099.

This is not a negotiable item. To ask for that is committing tax fraud. I would like to sell the home but I’m not going to prison for it!

Investment property owners can show they are insolvent, meaning they have more debt than assets, and can not afford the tax debt. Again we are not tax attorneys or CPA’s so please talk with someone who can give tax advice. The IRS Form 982 is for investment property owners doing a short sale of there home in Las Vegas or anywhere in the country to show whether or not they are insolvent.

So now we have worked for months to get the approval and the seller is refusing to sign this. If you are doing a short sale there could be tax consequences. Always consult with a CPA on this as instructed by your real estate agent. Before wasting the time of the buyer, buyer and selling agents, loss mitigation personal and lenders involved in closing the deal, make sure you are ready to close the home.