Monday Real Estate Market Myth: Cancellation of Debt

Myth: No matter when a struggling seller does a short sale, all the debt forgiven is not taxable.

FALSE:  Typically when debt is forgiven, the amount becomes taxable as it is seen as income to the person originally owing the money. In December 2007 a law temporarily suspended that rule in order for people to greatly consider the foreclosure alternative and provide a quicker market recovery.   The borrower cannot claim it as a loss or receive any benefit other than the fact of not having to owe taxes on the forgiven amount.  Sellers should consult a Certified Public Accountant for complete tax advice as this is set to expire at the end of 2012. For further information visit my Facebook.com/HollisterRealtor  and ask  real estate agent Kristen Jurevich at 831.635.6719 for information on a short sale or the best solution for you.

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