Legal Question in Tax Law in California

Short sale debt relief taxation

How dire do your financial circumstances have to be to avoid debt-relief taxation on a short sale of a home? No funds will be realized from the sale. While mortgage debt will be eliminated, $10,000 in credit card debt, 2 car notes, and living expenses will remain and will be manageable with the mortgage gone. I appreciate your help.


Asked on 12/02/06, 5:26 pm

1 Answer from Attorneys
Donald Field Donald L. Field, Jr., Attorney at Law

Re: Short sale debt relief taxation

the only exceptions are bankruptcy or insolvency. see:

http://www.irs.gov/publications/p908/ar02.html#d0e1058

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Answered on 12/05/06, 12:42 pm


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