I’ve had several sellers ask me about paying tax on the difference between the shortsale & the principle balance. They are concerned that the difference will be considered taxable income.
What is the truth?
Is it different in certain cases?
-Thanks
Forgiven debt is taxable income to the debtor. However, there is a new law regarding forgiven mortgage debt for a primary home. I don’t know the details. I have also seen people claim the $250K exemption available on the sale of a primary home.
they need to consult their CPA to determine the tax consquences of a short sale
Great. Thanks! I’m sure I can find something on the IRS web site.