Short Sale Deficiency – Personal Liability and Tax owed

If you decide to do a short sale on your home, remember that the short sale will generally result in personal liability to you for the deficiencyand that the bank will most likely sue you to collect on that amount.  It’s best to negotiate to have the deficiency waived as part of the process of the short sale.  If the bank is not willing to waive your personal liability then you have less incentive to do the short sale for them.  There are distressed homeowner programs which contain steps to eliminate liability for the deficiency.  It is important to seek good counsel to determine if you meet the qualifications involved.  Also don’t forget there is the hidden tax issue as well.  The bank will send a tax document at at the end of the year to show you are liable for the tax involved.  In most cases this can be relieved, but it can cause distress for the tax preparer who is not well versed in how to apply the rules.  We handle dozens of such projects each year and can help you resolve the issue of personal liablity and assess whether there is a tax liability involved.

Give my office a call to set up a consultation – it’s best to do this as part of an expected short sale rather than to do this after the sale has been completed.

Todd Courser 810-245-0813