Price

to

Beds

Baths

By Roberta Murphy - 2 May 13

Will I Owe Taxes on My San Diego Short Sale?

Taxes on forgiven mortgage debt

Tax on Short Sales?

This is a question anyone facing a short sale in 2013 should ask their Realtor.

We’ve written about these taxes before, but once again here is the information we present to our San Diego real estate clients:

For Federal tax returns, the mortgage fotgiveness debt relief on principal residences will remain in effect until December 31, 2013. Will it be extended? We don’t know.

For California tax returns and according to the California Franchise Tax Board, the debt forgiven on or after January 1, 2013 may still be excluded, but only if:Taxpayers were bankrupt when the discharge occurred (Title 11 discharge).

Taxpayers were insolvent (limited to level of insolvency).

Qualified farm indebtedness was canceled.

Debt was Qualified Real Property Business Indebtedness (QRPBI) and you make a federal election. The taxpayer cannot be a C corporation to use this exclusion.

If more than one of these exceptions applies, they are applied in the above order under Internal Revenue Code Section 108(a)(2).

(Our opinion? This sucks for distressed California homeowners. Most would not do a short sale if they were solvent and finances were in order. Some have been forced to move because of job or other necessities. Some have health issues. Some are just buried in debt and stress. Why would California lawmakers decide that its most financially stressed should bear the additional burden of being taxed on phantom income that doesn’t put food on the table or gas in the car?)

If you have questions or would like to discuss a possible short sale for your home, please feel free to give me a call at 877-818-8197 or 760-402-9101.–Roberta Murphy

Additional Reading”

A San Diego Short Sale Solution

Need to Short Sale Your San Diego Home?

Our Privacy Policy at San Diego Previews Real Estate

Join The Conversation

Go Social

Twitter Facebook profile Youtube Linkedin RSS

Be Part Of Our Mailing List

Submit your email to get all the latest posts sent directly to your inbox.

Email address
  • San Diego Previews
  • Roberta Murphy
  • 3205 La Costa Avenue
  • Carlsbad, CA 92009
  • CA BRE# 01101958
DISCLAIMER:

sandicor-logo-150x74SANDICOR® Disclaimer language must be added to any IDX Solution and/or IDX landing page of REALTOR website. SANDICOR®’s public disclaimer must be present on any website featuring Sandicor IDX data. It must be placed on the homepage, the IDX solution frame or website page featuring the IDX solution. This requirement may be implemented by your IDX data vendor, please contact your IDX data consultant to make the appropriate changes.   “ This information is deemed reliable but not guaranteed.  You should rely on this information only to decide whether or not to further investigate a particular property.  BEFORE MAKING ANY OTHER DECISION, YOU SHOULD PERSONALLY INVESTIGATE THE FACTS (e.g. square footage and lot size) with the assistance of an appropriate professional.  You may use this information only to identify properties you may be interested in investigating further.  All uses except for personal, non-commercial use in accordance with the foregoing purpose are prohibited.  Redistribution or copying of this information, any photographs or video tours is strictly prohibited.  This information is derived from the Internet Data Exchange (IDX) service provided by Sandicor®.  Displayed property listings may be held by a brokerage firm other than the broker and/or agent responsible for this display.  The information and any photographs and video tours and the compilation from which they are derived is protected by copyright.  Compilation © 2015 Sandicor®, Inc. ”

Equal Housing Opportunity.