Foreclosure in Pasadena>Question Details

Peter Hudson, Both Buyer and Seller in Murrieta, CA

IS THE REMAINING UNPAID DEBT IN A SHORT SALE TREATED AS INCOME IN MARYLAND - (PRIMARY RESIDENCE FOR MORE THAN 2 YEARS?)

Asked by Peter Hudson, Murrieta, CA Sat Apr 3, 2010

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6
Vince Caropreso’s answer
Until Dec 31, 2012 there is a law in place so that the forgiven debt will not count as incomebut it expires Jan1 2013. Please check with a tax professional to make sure.

Vince Caropreso
Realtor
Certified Distressed Property Expert
http://www.TeamCaropreso.com
0 votes Thank Flag Link Tue May 8, 2012
The forgiven amount should be exempt. As always please check with your accountant.
0 votes Thank Flag Link Wed Apr 14, 2010
The state has no relevance to your question. There was 2007 FEDERAL legislation that exempts you from tax liability. It is technically treated as income, but you get an exemption. Note that this only applies if the debt is forgiven (i.e., they issue a 1099) - there is no taxable income to the extent they pursue a deficiency.
0 votes Thank Flag Link Mon Apr 5, 2010
Not knowing all the details--protect yourself and consider a consultation with your tax professional and or tax attorney--
0 votes Thank Flag Link Sun Apr 4, 2010
It will depend on a couple things. First it will depend on the approval letter that the second mortgage sent you. Look at the laungage in the letter carefully, it is tricky, unless they are indicating a full settlement, there is a high chance that they will try to collect. The other thing is certain banks have policies that they always try to collect and lastly what is allowed in your state.

If they second does not collect, expect a 1099c, which will tax you on the debt that was forgiven.

Keith Manson
First Weber Group
Certified Distressed PRoperty Expert
metro Milwaukee

http://www.milwaukeebailout.com
0 votes Thank Flag Link Sun Apr 4, 2010
Hi Peter, I do not believe so but I would refer that question to your financial advisor or tax consultant.
0 votes Thank Flag Link Sat Apr 3, 2010
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