ILLMAS Posted June 3, 2016 Report Posted June 3, 2016 TP has has owned and lived in her home since 2009, in mid 2013 (6 months in 2013, 12 months in 2014, 12 months in 2015 and going on 6 months in 2016) TP has rented her home, so totaling close to 3 years. TP wants to do a short sale, might take two to three months to complete, bank has approved the short sale, would she be out of luck and lose out on treating it as a personal residence and not qualify for the mortgage debt forgiveness: "Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence."? TP is not in bankruptcy nor insolvent. Quote
joanmcq Posted June 4, 2016 Report Posted June 4, 2016 Look at the business real property exclusion. If she's rented it the last 3 years, it's not her principal residence. 2 Quote
kcjenkins Posted June 8, 2016 Report Posted June 8, 2016 The client creates the situation, we can not ignore the facts because she does not like the result. 4 Quote
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