In what might be the best news in a long time for those homeowners facing a short sale,
“The IRS has clarified in a letter that California’s troubled homeowners who sell their homes in a short sale are not subject to federal income tax liability on “phantom income” they never received.”
Thanks to Barbara Boxer who pushed this issue with the IRS and got this letter as clarification as the Mortgage Debt Forgiveness Act is set to expire 12/31/2013.
Many expect California to make a similar announcement for forgiveness of the “phantom” income. This blog post is NOT meant to offer tax advice. I am a REALTOR, not a tax attorney, CPA or tax professional. You must always consult with your own tax advisor related to tax /debt forgiveness.
Read on from CAR:
IMPORTANT: ALWAYS check with your OWN tax professional to confirm all details of YOUR taxes and YOUR liability. Your situation may vary, or this information may be inaccurate as it relates to you. This is NOT meant to be tax advice and you always must consult with a tax attorney, CPA or trusted tax professional for any matters related to tax /debt forgiveness.