How Does A Short Sale In California Work?

Question

Do we have to repay what is left on the loan, because we will be selling it for less then what is owed to our lenders? What about taxes at the end of the year? Thank you.

Additional Details

Okay, I just got two different answers but, which is correct?

Answer 1

Best Answer - Chosen by Voters

Do we have to repay what is left on the loan?

- No

What about taxes at the end of the year?

- You will receive a form 1099-C for the amount of the loan that was unpaid. This amount is taxable income that must be reported to the IRS and to the Franchise Tax Board.

Answer 2

Same as any state. You are still liable for the amount of the loan owing to the lender, but they may or may not pursue it.

You will get a tax statement at the end of the year for the amount of the loan which was forgiven.