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.