I purchased an investment house 3 years ago for $375K. I have rented it at a loss each year. It is now worth about $50K less than I owe the bank. If I sell it as a short sale I will get a 1099 next year for about $50K from the bank. When I do my taxes will the my $75K loss off set the 1099?
I would advise you to take this matter to a CPA. It really has less to do with the real estate law than tax advice.