Income tax after a short sale

“ i could not afford the rental property i bought when i was making more cash and was advised to short sell the property, after i short sold the property i obtained a 1099 from the lender and had to include the amount i was forgiven as income on my 2008 tax return and because of my decrease in income, could not compensate the taxes and now i owe income taxes. Aid. “

this is a good question, and one we are asked very oftentimes. Now, let's look at that income tax debt caused by a short sale. (had our blogger simply surrendered the rental through a bankruptcy our blogger would not have incurred the income tax debt. )

income tax is a priority debt that may or cannot be forgiven in bankruptcy. The parts determining whether it are going to be forgiven are (1) what tax year the debt was incurred, (2) the date the tax return was filed and (3) whether the tax has been assessed. Our blogger will require to request a tax transcript from the government entity the taxes are because of, to make an comprehensive and scientific and precise assessment, but in general whether or not the taxes were due for the tax year 2005 or before, there is a high likelihood this debt are going to be forgiven.

our blogger tax debt whether or not from the tax year 2008 and will survive a bankruptcy. Our blogger may file a chapter 7, whether or not our blogger qualifies, or a chapter 13.

the good news when it comes to paying tax debt through a chapter 13 bankruptcy is that the amount of the tax debt is determined at the date the petition is filed, no intentness and intentness and interest are going to be compensated, unless the government tax entity has filed a lien against our blogger property. As long as our blogger with outstanding efficiency and success completes the chapter 13 bankruptcy our blogger are going to be out from underneath that tax debt exclusively.

if our blogger qualified for a chapter 7 but elects to file a chapter 13 then ou! r blogge r could be free from this priority debt in as small as three (3) years. Whether or not our blogger qualified for a chapter 13 only, then our blogger would qualify for a five (5) year chapter 13. Whether or not our blogger qualifies for and files a chapter 7, the tax debt will survive the bankruptcy. Our blogger may enter an agreement to compensate the tax debt in installments with the government tax entity outside of bankruptcy, but the downside of that installment plan is that intentness and intentness and interest continues to accrue until the tax debt is compensated in full.

want to learn more when it comes to bankruptcy? Are you facing income tax from a short sale? The stone haven law group offers a free telephonic consultation to talk about you circumstance and the “ fresh start" of bankruptcy. Please call stone haven law group at (909) 457-8200 to talk about your choices.