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In the state of Florida is a seller of a short sale condo "off the hook" after the sale?

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May 02 2013 - Port Saint Lucie
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Often times when you sell your short sale, the bank will forgive the difference owed in writing, and you will have that document and the debt will be forgiven.

The key to that paragraph is getting the bank to agree to forgiveness in writing and before closing. Without it, you may be on the hook for the balance. Never assume the bank will, out of the goodness of their heart, forgive the balance. Banks don't have hearts, they have balance sheets.

What you will get (in either case) is a 1099 with the balance of 'income' you made (I know, it's phantom income to everyone but the IRS). Your tax professional can determine what's best in your situation.
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May 02 2013
You should read this Wall Street Journal article - House is Gone but the Debt Lives On....sorry....

http://online.wsj.com/article/SB10001424053111904060604576572532029526792.html?KEYWORDS=deficiency+judgment
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May 02 2013
First off.  Talk to a real estate attorney about this who is licensed in the state of Florida for more legal details. 
I am not an attorney and cannot advise you as one.

I am a real estate broker in Florida 

When you sell your primary residence in a short sale capacity, you will not be taxed on the difference that you owe the bank and what you sell the property for.  (Sell for $100,000, but owe $200,000).  The $100,000 difference will not be taxed for your primary.  For an investment property or second home, you will be taxed on that $100,000.  Speak to an accountant for more information on this.

You realtor may be correct about not having to worry so much.  Often times when you sell your short sale, the bank will forgive the difference owed in writing, and you will have that document and the debt will be forgiven.

Other times the bank will not guarantee this in writing, and you have to decide if you will still go forward with the short sale.

I'd say have a good attorney represent you in your short sale.  Many title companies do an excellent job, and if you have any questions about the process, you can contact the attorney.

Some short sale sellers are "off the hook", and others are not.  Every situation is different.

The banks have 5 years time after the short sale takes place to make a claim on the difference if they do not forgive the debt in writing. Often times, they do not come after the short sellers, especially if they do not have any assets to speak of.
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May 02 2013
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Thank you. Realtors are telling us no worries, but I am worried!
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May 02 2013
NOPE, Florida is a recourse state so a lender that got shorted because of a short sale can come after you for the loss they suffered even after the sale. The IRS can also tax you for the amount the bank did not make you pay since they look at it like a gift.
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May 02 2013
 
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