Profile picture for home66

I have an o/o home converted it as rental in 2007. plan to short sale it, am i liable for taxes

I live and own a home for over 10 yrs and convert it to a rental property in 2007,  right now I can't afford the monthly payment anymore no one is renting.  I defaulted my payments.  My question is would I be liable for any taxes if I sell it lower than how much I owe?
  • April 23 2009 - North Highlands
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (3)

Profile picture for home66
Thank you for the reply,  it is very helpful.
  • April 24 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Just wanted to add the link to the IRS website that Jessica might be talking about.

You may also want to check with a tax expert in your state to determine if there would be any state taxes.

Mortgage Foregiveness Debt Relief Act And Cancellation
  • April 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If you have used this home as a primary residence for the past two years then you do not have to pay taxes on what the bank 1099's you. Even if you rented out part of the home. You can go to the irs website and look up Short Sale. There is a bill that was put into place last year. It covers homeowners that sell thier primary residence short until December 2009. As long as you close before then, you should be okay. And not to worry, it has already been brought up in the House to extend that bill, due to the high levels of short sales.

If you have not lived in the home, then you are liable for taxes. The bank will 1099 you on what they forgive on the loan. So if you sell for 70k pay the Realtor $10k and the buyers $10k and owe $100k then they will 1099 you for 50k. You will need to pay taxed on 50k just like it was income.
  • April 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.