November 12, 2012

Expiring short sale tax relief could cost home sellers

By Marcie Geffner - HSH.com

A federal income tax break that benefits people who sell their home in a so-called short sale is set to expire Dec. 31, potentially exposing these sellers to higher tax bills. Sellers have little control over the matter, though being financially insolvent might help, if Congress doesn't come to the rescue.
The tax break at issue is the ability to exclude certain mortgage debt forgiven by a lender from ordinary income. For example, if your mortgage balance was $150,000, you sold your home for $120,000 and the lender wrote off $30,000, you might owe income tax on that amount.

Read on:
http://library.hsh.com/articles/homeowners-repeat-buyers/expiring-short-sale-tax-relief-could-cost-you-thousands.html