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Income taxes on a short sale

  • April 02 2014 - Spokane
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Answers (4)

Profile picture for sunnyview
Nolo has some information on short sale tax consequences and you can also find information about short sales on the IRS website. The Mortgage Forgiveness Tax Relief Act allows you to exclude certain cancelled mortgage debt from being considered taxable income if you took it between 2007-2013.

If you need a specific answer to your situation or more guidance, then I would suggest asking an accountant or tax attorney in your area. Hope the links help.
  • April 03 2014
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This is a question that needs to be answered by a tax professional who is familiar with your entire situation.

But to answer your question, there can be taxes on a short sale, even if you don't receive any money from the sale.  That would depend on your "tax basis" in the property (typically what you paid for it plus improvements), the extent to which you might be insolvent under IRC 108, and whether or not you used the house as your personal residence.  There could be other factors which also affect the result (e.g. have you ever rented the property, have you ever taken the home office deduction, have you filed bankruptcy, etc.).  Again, you need to consult a tax professional.

One thing you might read is that the Mortgage Debt Relief Act has expired.  That is true, although I would note that there is still talk of retroactively extending it.  Do not believe the reports that say that with it repealed you will be taxed, or that if it's extended you won't be taxed.  It's much more complicated than that.
  • April 03 2014
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Profile picture for user9665881
Is there Income taxes on short sale
  • April 03 2014
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Your question must have gotten cut off.  Can you repost the actual question again?

Thanks, 
 
  • April 02 2014
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