There are tax ramifications with a short sale and a foreclosure. Lots of people believe that there are no tax issues if your home goes to foreclosure. However, this just isn’t true. Many times the tax liability is larger with a foreclosure than with a short sale. In either case you will receive a 1099.
There is good news though. In most cases you will qualify for the Mortgage Debt Relief Act which allows your tax liability to be forgiven. We would encourage you to do a little research or contact us today for more information about your options to avoid foreclosure.
