Posted on: 09th Dec, 2010 11:09 am
We recieved a letter stating that a modification is not in our future but we could Short Sale or Deed in Lieu. My question is, how do we avoid paying taxes on the balance of the loan not covered by the short sale? We live in South Florida, this is our primary residence, no other loans on property.
Hi Gracie!
Welcome to forums!
In case of a short sale, you will remain liable for paying the deficient balance resulting from the sale of the property. In case the lender forgives the deficient balance, there are chances that you may not have to pay the taxes on the forgiven debt depending upon the Mortgage Debt Relief Act.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
In case of a short sale, you will remain liable for paying the deficient balance resulting from the sale of the property. In case the lender forgives the deficient balance, there are chances that you may not have to pay the taxes on the forgiven debt depending upon the Mortgage Debt Relief Act.
Feel free to ask if you've further queries.
Sussane