We own two homes, one we live in and another we rent. If we short sale the rental what are the tax consequences? Posted on July 28, 2010

We own two homes in Bakersfield, CA, one we live in and one we rent. Our income has decrease about $100,000 the past 3 months due to a job loss. We can no longer afford to cover the difference of the mortgage for our rental. The fair market rent we charge is $1450 however our payment on our interest only loan is about $1900. We are also behind on the property taxes on the rental, we don’t have an impound account. We want to short sale the rental, we are about $90,000 upside down. We are current on our payments and have never been late. What are the tax repercussions of doing this? Is there any way not to have the debit forgiveness added as income at the end of the year?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Click to View More Answers: