Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
The amount you lose on the sale would be treated as a capital loss. The amount that your lender forgives in debt, if any, as a result of the short sale would be treated as "income" and thus would be a capital gain. The two would then offset each other.
Please click "Accept" so that I can get credit for this answer. We can continue our conversation after that at no additional charge. Thank you.
This information is provided so you may better discuss legal issues with your attorney. Consult a local attorney for legal advice before acting. You may be able to find an attorney in your area to further assist you at http://www.martindale.com/ or at http://www.lawyers.com/ .