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 jlpaul65
Joined: 21 Oct 2008
Posts: 1
1.63 Dollars($)
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 Posted: Tue Oct 21, 2008 4:22 pm Post subject: Forgiven Debt in Estate |
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| I am the Executor of my Fathers estate and in addition to ~$5000 of credit card debt that was forgiven, the Mortgage holder accepted a short sale on the property which resulted in ~$21000 difference. Will the estate be required to pay taxes on this ~$26000 or will the ~$21000 be covered under the Mortgage Forgiveness Debt Relief Act and not be taxable. I have been unable to find any information talking about how this affects estates. |
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smithsussane
Joined: 18 Sep 2008
Posts: 3738
Location: Alaska
561.45 Dollars($)
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| Posted: Tue Oct 21, 2008 8:32 pm Post subject: |
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Hi jlpaul!
Welcome to forums!
If your state follows the Mortgage Forgiveness Debt Relief Act, then definitely they will forgive the taxes. But if the Mortgage Forgiveness Debt Relief Act is not followed in your state, then you will have to pay the taxes. May I know in which state do you live so that it will be easier for me to answer your question.
Sussane |
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JL
Guest
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| Posted: Wed Oct 22, 2008 9:08 am Post subject: |
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| The Estate is in Indiana |
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jameshogg
Joined: 20 Dec 2005
Posts: 4291
Location: nevada
509.34 Dollars($)
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| Posted: Wed Oct 22, 2008 11:54 pm Post subject: |
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Hi JL!
Apart from California, Mortgage Forgiveness Debt Relief Act is applied in all the states. Thus, there are chances that if the lender forgives the deficient amount, then you will not have to pay the taxes. However, there are certain criteria to it. You can have a look at the following link to know more:
http://www.mortgagefit.com/tax/debtforgiveness-reliefact.html
Thanks. |
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