You have two years from the payout to use the money for replacement property otherwise it is treated as ordinary income unless part of the proceeds were to cover lost rent in which case it would be rental income.You must use form 4684.

Honestly I was not familiar with them and he proceeded to educate me.

She would still need to know how to proceed from that point in order to get the property.

[Editor's Note: Special: What the Mainstream Media is NOT Telling You About The Economy]Bernanke also encouraged investors to step up and accept more so-called "short sales," where the bank accepts a lower payoff in exchange for avoiding the lengthy foreclosure proceedings.

I would be willing to guess that the sister had a bigger part in this fiasco than what's being reported.And yea, the attorney who suggested she proceed with signing supposedly incorrect documents probably should have been in question as well.

That said, while I think the back and forth has been eye-opening for myself and I'm sure anyone else, I do want to reiterate that we're here to talk about real estate, not to bash one another or to accuse one another of things.You're welcome to debate the legality of flipping/wholesaling REO properties, but I don't want to see any more nastiness thrown around.Please be respectful to each other.Thank you.

My lawyers told me if I am persistent then I have a chance to get them to change the text, but the odds are not on my side.Of course, had I known this before I entered the short sale process I would have thought twice and almost certainly never proceeded.

Some high paid official somewhere figured out that short sales actually cost less than proceeding through foreclosure with legal fees and another 4-12 months of holding the property without recieving payments.

Hopefully, between the seller's own knowledge level and the transparency you are providing to the seller about your own intentions, the seller will be equipped to make his own choice as to whether to proceed or not.

I explain to her that my buyer is paying me to bring him the deal, so my profit doesn't come out of her sale proceeds.