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Hi, I live in Utah and am attempting a short sale on my

Hi, I live in Utah and...
Hi,

I live in Utah and am attempting a short sale on my home.

We have recieved an offer for 100K, and owe approx 165K.

We have missed the last couple of payments.

If the short sale is accepted I understand there is a tax burden in the form of a 1099 for the amount forgiven.

Is there any way to write off or be forgiven of this tax?
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Answered in 1 minute by:
8/3/2010
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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HelloCustomer

 

Is this home your primary home that you live in or is this a vacation home or rental property?

 

 

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Customer reply replied 7 years ago
I am presently divorced, but it was our primary home. My ex wife presently lives in the home.

Hello againCustomer

 

Normally when you have a debt that is canceled or forgiven, you are responsible for paying taxes on the amount of the forgiven loan. However, due to the recent mortgage lending crisis in our country, Congress has enacted temporary legislation which allows taxpayers to exclude canceled debt from a foreclosure on their primary home from being taxable income.

 

The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain canceled debt on your principal residence from your income. It applies to mortgage debts that are canceled during the calendar years of 2007 through 2011 . You would still receive a 1099-C form from your bank showing the amount of the debt that was canceled, but you will file Form 982 which you attach to your tax return, and claim an exclusion for paying taxes under this new law.


You simply need to file Form 982 with your tax return. Check the box on line 1e showing that you are claiming exclusion of debt on your principal residence. And then on line #2, enter the amount of the canceled debt as shown in box #2 of the 1099-C form. You will then not need to pay taxes on this forgiven debt.


If this was helpful please press the Accept button. Positive feedback is also appreciated.
Thank youCustomer/p>

 

 

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified
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Merlo
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
9,783 Satisfied Customers
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad

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