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You are here: Home / Blog / Taxation Of Short Sales And Foreclosures

Taxation Of Short Sales And Foreclosures

September 17, 2008 By

We receive lots of questions about tax liability of short sales and foreclosures.  As real estate brokers we are not licensed to give advice on this topic however we can lead you to the information that may answer your questions. 

On December 20, 2007 the Mortgage Forgiveness Debt Relief Act of 2007 was enacted. Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income.  More information regarding the Mortgage Debt Relief Act can be found on the IRS website:

https://www.irs.gov/individuals/article/0,,id=179414,00.html

Or the California Association of Realtors has put together an FAQ regarding the taxation of Foreclosures, Deeds in Lieu of Foreclosure, and Short Sales.  This is more detailed information and specific to California.

https://www.parsonsrealty.com/parsons_realty/taxes/car_faq.pdf

Filed Under: Blog, Foreclosure Help, selling

Comments

  1. Tim Ramsey says

    September 17, 2008 at 5:04 pm

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

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