Monday, March 16, 2009
Being Taxed After A Foreclosure or Short Selling A House
As a Reno – Sparks real estate consultant I encourage any questions or comments on the Reno – Sparks real estate market or about any of the articles I post. You can email me at chance@ballard-company.com
What happens is that people who finally get through a foreclosure or short sale transaction are relieved and think they’re done. You see, whether you foreclose or short sell, there is money that was owed but not paid back. I know this is strange, but the IRS sees this unpaid money as earned income that they then tax you on.So what is the best way to stop this?
You get expert advice on how to qualify and file for something called the Mortgage Forgiveness Debt Relief Act this is why it is always recommended to consult with a CPA and an attorney. The key to avoiding or reducing your tax responsibility after a short sale or foreclosure is to make sure you know all the options in advance. Being prepared with all the correct forms filled out could say you a huge headache in the end.
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