Is there a new law or tax implication ie. 1099 in 2013 if you sort sale or foreclose?

That question would better be answered by a tax attorney or perhaps real estate attorney. This forum is for mortgage related questions.

It's called the Mortgage Forgiveness Debt Relief Act.. And it is due to expire December 31, 2012. If you short sell your home, then according to the IRS, because you received a benefit (the difference between what was owed and what the lenders net proceeds were), then the IRS calls that income (Industry calls it Phantom Income), and under IRS rules, you have to pay taxes on it.. In 2007, they initiated the MFDRA, which was a waiver of the taxes due on these short sale properties.. Certain guidelines apply, so you should read the publication yourself or have your account explain it, but in general you won't owe taxes on the forgiven debt. Here's the Link... http://www.irs.gov/individuals/article/0,,id=179414,00.html/ Even though this is due to expire at year's end, you still might not have to pay taxes on phantom income.. There is a solvency test, and depending on the outcome, you still might not owe even after the expiration of the act.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

As William said, the Mortgage Forgiveness Debt Relief Act it is due to expire December 31, 2012. It is unlikely the current congress will extend it, since they can't seem to do anything these days. All is not lost though. If after your short sale, you are technically bankrupt (liabilities greater than assets), you may still obtain relief from the IRS. Talk to your accountant or look into IRS Form 982 for more details on ways to avoid paying tax on forgiven debt. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

The Mortgage Forgiveness Debt Relief Act of 2007 is scheduled to expire on December 31, 2012, so short sales need to close by that date to qualify for a substantial tax benefit. If this act is not extend people who short sell their home in 2013 will need to include the mortgage debt forgiven by lenders as ordinary income and pay taxes on it. This a replacement act in the Presidents 2013 budget, is hasn't passed yet.