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john14 · Joined: 19 Jul 2010 Posts: 1 1.00 Dollars($)

Hello.

I recently closed on an lender-approved Short Sale where I sold the home for $226,000. The appraised value of the home came in at $230,000. The principle owed on the home was around $254,000. The MI (Mortgage Insurance) Company made me sign a promissory note for $20,000 in order for them to approve the short sale.

My question is, what are the tax implications with this transaction? Can anyone help me understand what I should be prepared for exactly?

Thanks in advance

smithsussane · Posted: Mon Jul 19, 2010 11:44 pm Post subject:

Hi john!

Welcome to forums!

You have signed the promissory note which makes you liable for paying off the deficient balance to the insurance company. Thus, the dues will not be forgiven. In that case, you won't be liable for paying any taxes.

Feel free to ask if you've further queries.

Sussane

Guest

Our house is on short-sale for $500,000. Though we originally owe the banks $1.2M (one is $1M and the remaining on the 2nd). The 2nd loan is on HIloc. What would be the tax implication on us?

adonis · Posted: Sun Oct 03, 2010 9:38 pm Post subject:

Welcome Bing,

If you pay off the deficient balance to the lender, then you won't be liable for any taxes. If the lender forgives the deficient balance resulting from the sale, then too, you won't be liable for paying any taxes due to the Mortgage Debt Relief Act.

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Short Sale - Tax Implications