I bought a real estate property in 2005 for $50,000. I had to sell it at short sale for $18,000. The bank sent me a 1099a for the $32,000 difference. Will this be considered income even though I lost money and had no gain.

ANSWER

The BIDaWIZ Team's Answer:

Debts forgiven on second homes, rental property, business property, credit cards or car loans do not qualify for the tax relief provision; this is only for your primary residence. There are some exceptions to the rule such as if you were insolvent at the time that the debt was relieved (IRC 108), but that would likely require a consultation with a CPA.