If I do a short sale on my home, will I have to pay taxes on the difference between the remaining loan balanceand the sales price?

Get Legal Help Today

 Secured with SHA-256 Encryption

If I do a short sale on my home, will I have to pay taxes on the difference between the remaining loan balanceand the sales price?

With the market crash, my loan is now negatively amortizing.

Asked on August 3, 2011 New Jersey

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

In all likelihood if a short sale happens with you home where it is sold for less than what is owed on it, you will be subject to possible taxation for the "forgiveness of the debt" both at the federal and state level.

Before you close the transacion on the short sale, you should speak with a tax attorney or a certifiied public accountant about the tax ramifications to you if you receive "debt forgiveness" on the transaction. Possibly these two types of tax experts will be able to assist in minimizing the perceived taxable event on the short sale to youand if not, you will be prepared for the result.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption