Pursuing a short sale could soon be much more taxing for homeowners heading into 2013.
A short sale occurs when lenders forgive part of the loan debt (technically viewed as income, for tax purposes) and take less than they’re owed. The Mortgage Debt Relief Act of 2007 has been allowing home sellers to exclude up to $2M of this debt/income on their principal residence since 2007. Debt related to a loan modification, as well as a foreclosure, has also qualified for the exclusion. Continue Reading