I’m still surfing section 121 of the IRS code for information concerning this particular exemption but I can’t find anything difinitive. Do you know of a particular IRS form or publication that states the exemption?
The person I’m working with (seller) has an attorney who says he’ll (seller) will have to pay tax on the difference. My seller lived in the house for the last (5) years and should be eligible for the exception. But my seller and his lawyer need proof. Can you help?
Again any help will be appreciated!
Thanks,
Joe
PS I don’t have any spare cash to pay a CPA to give me proof.
Does anyone know the section of the IRS code that EXEMPTS a seller from paying tax on a discounted mortgage deal if the seller lived in a house for at least (2) years as a personal residence?
Is it a myth that such an exemption exists? Does anyone know for sure???
Note: After a discounted mortgage deal has taken place the bank/mortgage company is required to issue a 1099 to the seller for an amount that represents the difference between the mortgage amount and the discounted mortgage amount the property sold for. On its surface the IRS sees the difference as income.
Re: 1099 and Discount Mortgage Deals - Posted by Diane (TX)
Posted by Diane (TX) on July 15, 2003 at 20:48:37:
The Code section is 121, which is for the home gain sale exclusion. The seller must also have owned and lived in the house for 2 years out of the last 5 years.
Even though he gets a 1099, the reported income is for the home sale. The gain on the home sale isn’t taxable if the 2 year residence and ownership tests are met.