If you are needing to sell your home “short” (a short sale) there is always the question as to whether you will have to pay taxes on the difference of what it sells for and what you owed… when the bank forgives the difference it is often referred to as a “phantom” income in that you never see it but it’s there when the bank forgives it so that the home can be sold.
Well… you can get taxed on that phantom income just like any other income and that is where the real estate agent will always tell the homeowner to talk with an attorney and/or their accountant.
The good news is that you may not get taxed on that forgiven phantom amount. It’s not often that I link to other bloggers but this blogger in Orlando, Florida did a great job summarizing who gets taxed and who doesn’t. For more information on the Debt Foregiveness Act of 2007 click here! (Thanks Jerry! I loved Florida by the way!)
-Kristie McD. Your “Everything. Portland. Real Estate.” Realtor!
Tags: debt forgiveness act, phantom income, short sale, Taxes