realestateremedies 0 Report post Posted November 8, 2006 If a homeowner is losing his house to foreclosure and I come in and short sale the property, I realize that the difference between the purchase price of the property and the loan amount is considered income and the homeowner is issued a 1099 for that amount. However, are they able to offset that by claiming depreciation on the property itself since they took such a big hit on value?? I realize on investment properties depreciation can be accounted for, but what about on owner occupants?? Thanks! Share this post Link to post Share on other sites
Dave T 0 Report post Posted November 8, 2006 A 1099 for the short sale amount is not always the outcome. Sometimes lenders seek a judgement against the borrower for the deficiency. In the event a 1099 is issued, it does not always result in a tax consequence for the defaulting borrower. For example, if the borrower is insolvent, the 1099 amount is not included in ordinary income. No. the homeowner is not allowed to depreciate his personal residence. Any tax loss on the sale of the property is a personal expense and can not be deducted. Share this post Link to post Share on other sites
