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News Article From: 01-13-2010Tax consequences from short sales - Debt forgiveness on loans used to purchase homes is generally not taxable income. Under the Debt Forgiveness Act of 2007, any debt forgiveness on a loan used to purchase a principal residence is not taxable income. Therefore, if the short sale has been approved, the seller should have no taxable income on any debt forgiveness. In the case of a rental home, the IRS has ruled that there is no tax liability for debt forgiveness of non-recourse debt. Under Arizona law, any loan used to purchase a home is generally non-recourse debt; that is, the homeowner has no personal liability for the loan. Consult a legal or tax adviser before making decisions. See the full article for more details: http://www.azcentral.com/arizonarepublic/business/articles/2010/01/13/20100113biz-combs0113.html |
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