Short sale question

[AlreadyFiled]

a girl i know short saled her house. for example her house/loan was for $550 but she short saled for $150. do you know if she is going to have to be responsible for the difference in regards to still paying back the loan difference or if not, tax consequences? when i filed for my CH7 last year i knew all the info about short sales, but now that things have changed and laws have passed but i dont know about them nowadays.


a short answer is fine.
just curious...

[BobMango]

The difference between the loan amount and the short sale price could definitely be a tax liability if the lender 1099s her. Your friend will need to consult with a tax expert on this one. Generally she would not be liable for the tax on the difference if she files bankruptcy since the tax code takes into account your insolvency. There are other ways to demonstrate insolvency as well, but again a tax expert like a CPA or registered agent would provide the best advice.

[justbroke]

If your friend gets a 1099-A/C then she may be liable for the taxes on any amount forgiven, as this could be considered a capital gain

She would need to consult a good tax preparer/professional if there is any tax liability on this. There was some relief that the prior presidential administration put in place for some of this. (Mortgage Forgiveness Debt Relief Act of 2007)