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QUESTION DETAIL
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If I can no longer pay my mortgage and decide to do a short sale, do I have to pay taxes on the difference of the amount owed versus what the actual sale was?
ANSWER
The BIDaWIZ Team's Answer:
The cancellation of indebtedness amount will be reported on
Schedule D, of your Form 1040. The debt cancellation amount is
the sales proceeds amount, and the price that you paid for the home is the
basis amount. Thus, there will be a loss shown, and no tax will be
owed on the transaction.
