Question: If a non-primary residence in NY goes into foreclosure, what determines whether I receive a 1099-C or a deficiency judgment for the bank’s loss?
Answer: -A lot of times it just depends on the lender and the amount that’s deficient. You really don’t have any control when your property forecloses. If they believe you have some assets, they may file a judgment against you.
However, when you negotiate the short sale with the lender, you can actually control what happens to the homeowner. If you ask for a satisfaction which means “paid in full”, the lender gives up their rights to come after the borrower for a deficiency judgment which is really what you should be concerned about. They can still and most likely will issue the 1099-c for the homeowner. However, for most homeowners, form 982 will counteract that 1099. Just talk to your accountant about it.