I went through a bankruptcy that was final in February 2012. I included my home in that bankruptcy. I kept it up for sale, however, hoping for a short sale thinking it may not damage my credit rating as greatly. I received and accepted a short sale. It will be closing in about 6 weeks. My question: Being that the home was in the bankruptcy and being that it will be a short sale......will I have any tax liability for the difference between the amount owed the lender (FHA, Bank of America: about $85k) and the sale price ($50k)?
1 Answer from Attorneys
The legal results of a short sale are governed by the contractual provisions
of the short sale. Generally, short sales do not involve tax liabilities
unless the seller has agreed to such. I assume you have not. If the mortgage debt
was discharged as part of the bankruptcy, there is no tax liability. It is likely there
was no capital gains from the short sale so there should be no tax consequences.
This opinion is based on the facts expressed in your inquiry.
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