Short sale vs foreclosure

AlohaStyle · 08-04-2011, 08:22 PM

If you sold before 2012 ends, looks like you wouldn't be taxed on difference:

http://online.wsj.com/article/SB122727771262147895.html
As for your tax situation: because of the Mortgage Forgiveness Debt Relief Act of 2007 and the recently passed Emergency Economic Stabilization Act, you can exclude up to $2 million of income ($1 million if married filing separately) from debt that's discharged through mortgage restructuring, or that's forgiven in connection with foreclosure, for the years 2007 through 2012. The exclusion must be connected with a decline in the home's value or the taxpayer's financial condition, and only applies to a principal residence, not investment properties. You can claim relief on your principal residence through IRS form 982.

08-04-2011, 08:22 PM	#9
AlohaStyle Have My Own Room Join Date: Sep 2009 First Name: Ryan Location: WA Posts: 1,168 Trading: (40)	Re: Short sale vs foreclosure If you sold before 2012 ends, looks like you wouldn't be taxed on difference: http://online.wsj.com/article/SB122727771262147895.html As for your tax situation: because of the Mortgage Forgiveness Debt Relief Act of 2007 and the recently passed Emergency Economic Stabilization Act, you can exclude up to $2 million of income ($1 million if married filing separately) from debt that's discharged through mortgage restructuring, or that's forgiven in connection with foreclosure, for the years 2007 through 2012. The exclusion must be connected with a decline in the home's value or the taxpayer's financial condition, and only applies to a principal residence, not investment properties. You can claim relief on your principal residence through IRS form 982.