A short sale may have credit or legal consequences and may result in taxable income to Seller.  The Seller is advised to seek advice from an attorney, certified public accountant or other expert regarding such potential consequences of a short sale.

Below is an outline of some of the consequences of a short sale or foreclosure.

1) Long term effect on credit and credit scores

2) Still accountable for deficiencies

3) Internal Revenue 1099 Tax liability

4) Loss of Equity

If you choose to have your REALTOR® negotiate a short sale with your lender(s), it is imperative that you know and understand the consequences. Consequences arise whenever a deficiency is created. Basically, a deficiency is the difference between what the property is SOLD for, and the mortgage balance owed to the lender. A deficiency can result from either a short sale or a foreclosure.

As of December 20, 2007 national legislation was passed ~ please click here for more information on the Mortgage Forgiveness Debt Relief Act.

The information provided in these foreclosure/short sale pages has come from not only our experience, but the Certified Foreclosure Specialist course provided by ForeclosureU.com.