Tax Prep by Deb Posted December 12, 2008 Report Posted December 12, 2008 Can someone tell me if a short sale would qualify under the mortgage debt foregiveness act? Or does it only apply in the case of foreclosure? Deb! Quote
TAXBILLY Posted December 12, 2008 Report Posted December 12, 2008 It applies in the case of primary residence qualified mortgage interest. taxbilly Quote
jainen Posted December 12, 2008 Report Posted December 12, 2008 >>does it only apply in the case of foreclosure?<< It applies when there is income from relief of indebtedness, which could happen from restructuring a loan in lieu of foreclosure. But not every short sale has income from relief of indebtedness, and even if ordinary income is excluded there may still be taxable capital gains. Review the transaction and regs carefully. Quote
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