Real Estate Law
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A deed in lieu may generate unwelcome taxable income based on the amount of your "forgiven debt. The IRS treats forgiven debt as taxable income, subject to regular income tax. When debt is forgiven or canceled by a lender, the amount that has been forgiven is considered income for tax purposes, whether the debt is a mortgage or another kind of credit. That means you must report the amount of the canceled (or forgiven) loan on your tax return and pay taxes on it, just like any other kind of income. We can discuss more if you would like to do so.