If it was an owner occupied property, you are good. If it was an investment, contact an accountant based on your situation.

Brenda,

I would actually consult a tax professional on this. That would be your safest bet since us Realtors may have an idea, but a tax professional would know exactly how to report it based on your tax situation.

Refer to the Mortgage Debt Forgiveness Act of 2007 http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html

"This Act will create a three-year window for homeowners to refinance their mortgage and PAY NO TAXES on any debt forgiveness that they receive.

Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed."

Brenda
This is s complicated question that I cannot answer in just a post.

See the link below. If you need and/or are considering selling and/or modifying the loan on your home you need a local expert who know your local market trends and values, your home, and your situation.

To be fair to you, I need to refer you to a local expert.

Let me know if I can help. Check out the link below. In short...it depends on your situation.