What are the tax consequenses of a short sale?

Federal and State laws have recently been enacted that eliminate the tax consequenses for most indivuals who must sell thier house short of the full amount that they owe. As licensed real estate professionals, we can help guide you to the appropriate infomation and resources.

For more information about Tax Relief from debt cancellation in your particular situation you should consult a tax professional and refer to these government links:

IRS Mortgage Forgiveness Debt Relief Act
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief. (from irs.gov)

California Franchise Tax Board
On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013. (from ftb.ca.gov)