Posted on: 03rd Jul, 2011 10:00 am
I bought my condo in Feb. 2006 and lived there until Dec. 2008. In July of 2006 I got a new job in a city about 65 miles away. I stayed in my condo and commuted until it became too much and I purchased a home near my new job. Ever the optimist, I kept the condo and started renting out rooms hoping the market would revive eventually.
I am now -$79,000 in equity and clearly the market is not going to return even a portion of that value anytime soon.
What are the tax consequences of a short sale or DIL where I have been out of the home for the most part since Dec. 2008? Do the 2+ years stayed there as a primary residence qualify me to avoid paying income tax on any forgiven balances under a short sale or DIL? And, with the 5 year mark coming do I need to get something done prior to Dec. 2011?
Thanks!
I am now -$79,000 in equity and clearly the market is not going to return even a portion of that value anytime soon.
What are the tax consequences of a short sale or DIL where I have been out of the home for the most part since Dec. 2008? Do the 2+ years stayed there as a primary residence qualify me to avoid paying income tax on any forgiven balances under a short sale or DIL? And, with the 5 year mark coming do I need to get something done prior to Dec. 2011?
Thanks!
hi trentja,
if you go for a deed in lieu of foreclosure, the deficient balance will be forgiven. depending upon that, you will be liable for paying taxes for the forgiven amount. but again, as the mortgage debt relief act is still in vogue, you won't be liable for paying taxes. as far as short sale is concerned, you will have to pay the deficient balance to the lender.
thanks
if you go for a deed in lieu of foreclosure, the deficient balance will be forgiven. depending upon that, you will be liable for paying taxes for the forgiven amount. but again, as the mortgage debt relief act is still in vogue, you won't be liable for paying taxes. as far as short sale is concerned, you will have to pay the deficient balance to the lender.
thanks