Understanding All About Taxes During Short Sales
Prior to 2007, most people were unaware of the concept of short sale. But this doesn’t seem to be the case anymore. Most homeowners are aware of the concept and are also utilizing the short sale route to avoid the foreclosure problem. A short sale is where the lender gets a lower value in the sale of the house as compared to the mortgage loan outstanding of the homeowner. Many national surveys have suggested that at least 1 out of every 6 homeowners will be faced with the threat of foreclosure and will be utilizing the route of short sale also.
The trend of short sale that is being increasingly used by the homeowners is also making it a little difficult for the homeowners. This has created some problems for the IRS as they are also trying to ascertain the situation and coming to grips with it. Many homeowners also understand the fact that there may still be tax implications when they perform a short sale. Currently there are some considerations that exempt the homeowner from paying taxes when they do short sale.