Do I pay tax if I short sale my house?

ANSWER

Expert Matthew Peterson's Answer:

The Mortgage Debt Relief Act of 2007 allows taxpayers to exclude from income the amount of mortgage indebtedness forgiven through a short sale of their qualified principal residence. The amount excluded from the taxpayer's income is limited to $2 million if married filing a joint return and $1 million for filing single.

For complete details, read IRS Publication 4681 located at www.irs.gov/pub/irs-pdf/p4681.pdf

Matthew Peterson, CPA

Washington

4 yrs experience

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