Wednesday, July 25, 2007

Are you considering a short sale to avoid foreclosure?

Here's a really good article you should read.

The most interesting section, I think, is the part about the IRS. Broderick Perkins says....

"The deal isn't over until the tax collector sings.

The difference between your home's value and the balance on your mortgage is considered a forgiveness of debt and unless you work out a deal with the lender to repay the difference over time, the amount will be considered taxable income."

3 comments:

John Povejsil said...

There's going to be lots of trouble over this. While short sales have their place, borrowers who are granted them are in for a nasty shock which is going to be bad for everybody.

Diane Cipa, The Closing Specialists® said...

Agreed. Here's hoping this article helps folks work out the short sale details and avoid the tax consequences.

Diane Cipa, The Closing Specialists® said...

Hmmmm....

I'm getting mixed feedback on this issue. If you are going into foreclosure, you may have the same risk of an IRS lien. I've heard from some folks who have and some who have not.