Hello and thank you for the opportunity to assist you. My name is XXXXX XXXXX I will do my very best to answer your legal questions.
Q: My question is do I owe taxes on this home. I owed 145,000. Its real estate value was about 100,000.
A: Unfortunately, you do potentially face tax liability. If the fair market value of the property is $100k, and the mortgage is $145k, that means $45k was forgiven. The IRS taxes forgiven debt as income. In other words, once the obligation to repay a loan is removed, then it is no longer a loan ... it is just income. Congress did pass a law that relieves homeowners
of tax liability for forgiven mortgage debt ... but only if the house was the taxpayer's principle residence in the year in which the tax relief is given. In this case, since you rent the property, you would not qualify for the relief. So, it sounds like you'll have to pay income taxes on the $45k (note: your taxes wouldn't be $45k ... but you would be taxed on the $45k just as if you had gotten a $45k bonus at work).
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