Short Sale Fraud – It’s not a law; nor is it an official policy, but it’s definitely going to be a problem regardless. The latest opinion released from Freddie Mac on short sales presents legal and practical issues for short sale investors.

On Friday, April 16, 2010, the organization posted an educational article titled “Emerging Fraud Trends: Short Payoff Fraud.” The article described a new trend in short sale fraud that happens when a short sale buyer flips a newly acquired property to another buyer and “pockets the difference.” This could spell trouble for investors who have been short-sale flipping, which means negotiating a short sale with the bank, then selling the property immediately to another buyer for a profit of a few thousand to tens of thousands of dollars.

The Freddie Mac poster went on to describe scenarios and red flags for short payoff fraud. The scenario involved a facilitator, whose description matched that of a real estate short sale investor, who negotiated a deal with a lender to short sale a home worth $80,000 with a debt of $100,000 for $70,000. In the scenario, the facilitator fails to notify the bank he has a higher offer, 95,000, on the house. When both transactions close and the facilitator pockets his profit, Freddie Mac considers him to have committed fraud since Freddie Mac has now taken a “larger than necessary” loss on the sale.

The article urges buyers, sellers and lenders to be on the lookout for short payoff fraud red flags. These flags include sudden borrower default, a borrower who is current on other obligations and the buyer of the property being an entity rather than a person. The article also tells readers to keep an eye out for resale options in their purchase agreement.

Buyers, sellers and lenders all are encouraged to report short sale fraud the second they become aware of or suspect a second purchase contract for a higher price. This may not yet be a law, but the signs are not good when Freddie Mac has posted such a direct attack on short sale investors.

Doing your taxes on your own can be risky, but you may even run some risk when you go to someone else to do your taxes. This means you should do some research on which tax deductible items that you can truly claim on your taxes, and which ones may raise red flags with the IRS. You should keep track of all of these things throughout the year so that you are not struggling to find what you need when it comes time to file your taxes with the government.

You should also make sure you have all that you need to protect yourself. First, you should know your limits on tax deduction items. You may have some business lunches or dinners for your business, but you should not be claiming meals that have nothing to do with your work.

There are many that do this, but they do get caught doing it from time to time. Keep it honest and there is nothing that can go wrong. The same can be said for buying things for your home and then claiming them as a business expense. That can really come back to haunt you in the future.

Instead, think about the scope of your business, and take all of the right deductions. If you have a business at home, you can claim office space if that is what you do exclusively in that space. You can also make your computer a tax deductions item as long as you use it for business all of the time.

You may find that much of your supply stash is also a good choice as tax deductible items. Other things that can be deducted from your taxes should follow the same guidelines. Make sure you use these things for your business, and they are all good to go. Keeping track of your business tax items should be done all throughout the year.

Have a special notebook or program that you use for just that. Note each purchase and price, and then put the receipt in a special place so that you have them in one spot. If you have a lot to deal with, it might be in your best interest to keep them in folders for each month.

That makes sorting through your items for tax deductions much easier to do when that stressful tax-filing time of the year comes up yet again. This time, you won’t be behind and you will be so much more relaxed about getting it right.