Short Sales could cost you big Dollars To UNCLE SAM !!!

As more underwater homeowners pursue short sales and principal reductions, they may not realize they are facing a deadline.





If debt you owe on your primary home is forgiven by Dec. 31, you will not have to pay federal income tax on that forgiven debt, as long as it was used to "buy, build or substantially improve your principal residence."  But if that debt is forgiven after 2012, borrowers will once again owe income tax on that amount. If you do a short sale and your lender writes off $100,000 of what you owed, that could mean a hefty tax bill. The same goes for foreclosure, in some states, or principal reductions that are part of mortgage modifications.

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  • September 20 2012 - Citrus Springs
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Answers (1)

Profile picture for Donna Dorsey
Hey Tom....good to see you again. 

Luckily they extended this one.....it would have been ugly if they didn't!

Are you still doing mortgages?
  • April 05 2013
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