SHORT SELLERS CLAIM 1099 TAX RELIEF

Homeowners who did Mortgage Work Outs or Short Sales, whose mortgage debt was partially or entirely forgiven between 2007-2012 are able to claim special tax relief by filling out the revised Form 982 and attach it to the coinciding federal income tax return, according to the Internal Revenue Service. Legislation enacted in October 2008 extended the Mortgage Forgiveness Debt Relief Act of 2007 through 2012. Thus this relief now applies to debt forgiven in calendar years 2007 through 2012. Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. 

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