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capitol gains in distressed situation

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Joanie Guest	Posted: Sun Feb 14, 2010 2:07 am    Post subject: capitol gains in distressed situation Like 0 Dislike 0 property in Hawaii. 1. Are there capitol gain tax issues for property forclosure, short sales or deed in Lieu 2. And have they extended the Mortgage debt forgiveness Debt Relief to 2110? My property is upside down and Hawaii is a recourse state.
jameshogg Joined: 20 Dec 2005 Posts: 10460 Location: Nevada 987.57 Dollars($)	Posted: Sun Feb 14, 2010 10:05 pm    Post subject: Like 0 Dislike 0 Hi Joanie, I don't think you would be liable for capital gains tax if your property goes through a foreclosure, short sale or a deed in lieu. However, the lender may sue you for the deficient amount resulting from the short sale or foreclosure. However, if the lender forgives the balance amount, then you would be liable for the taxes. But as the Mortgage Debt Relief Act has been extended till 2012, you won't have to pay the taxes on the forgiven amount. Thanks

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