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  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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