Short Sale On Investment Property
If you have an investment property but cannot meet the monthly mortgage payments, it is quite possible for you to opt for a short sale. |
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However, in order to short sale an investment property, you would first have to get approval from the lender. Even if your investment property is not generating income, the lender will not take this into consideration. What they will look for is whether you can meet your monthly financial obligation to them.
Besides the above, the lender will also take into consideration the state of the local real estate market and what sale price the buyer is offering. However, in order to get approval for short sale on investment property, it might be helpful to show that you are suffering from personal financial problems and the market conditions in your locality are not conducive to you retaining the property. This is the best way of getting an approval for short sale on an investment property.
Another factor that you have to consider when making a short sale on an investment property is the tax implication. Depending on how much your property is sold for, you will get a 1099 form from the lender that covers the difference between what the property was sold for and what the property is actually worth. Even though you do not make a profit out of the sale, the IRS will treat the difference as an income, which is taxable. Although the lender does not pursue you for the difference, the IRS will pursue you for the tax on that amount.
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