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Real Estate
The Real Estate Adviser |
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May 17, 2007
The Real Estate Adivser: Mortgage forgiveness can bring a tax penalty
By TOM KELLY
Special to the Journal
Special to the Journal
I once asked an accountant why a homeowner had to face a surprising penalty from the Internal Revenue Service after losing his job and his home because of a downturn in the economy.
When the homeowner had to sell his home for less than its purchase price (known as a short sale), the bank also forgave a portion of the mortgage. The amount forgiven, $15,000, showed up as taxable income on the homeowner's tax return.
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Previous columns:
- The Real Estate Adviser: Foreclosure rescue scams on the rise, 05-03-2007
- The Real Estate Adviser: Be clear on rules for selling second home, 04-26-2007
- The Real Estate Adviser: Long-term investors should look at homes, 04-19-2007
- The Real Estate Adviser: These days, it's sellers who hire an inspector, 04-12-2007
- The Real Estate Adviser: Let's not hammer all the subprime lenders, 04-05-2007
- Real Estate Advisor: Can't sell? Then try divine intervention, 03-29-2007
- The Real Estate Adviser: Four reasons real estate beats stock investments, 03-15-2007
- The Real Estate Adviser: Beware the pitfalls of seller financing, 03-08-2007