With regards to a short sale, as long as the residence being sold is your Qualified Principal Residence, the seller will not be taxed on the difference between the fair market value of the home and the sold price through the Mortgage Foregiveness Debt Relief Act of 2007. Investors and Builders need to be aware that they may be taxed for the difference on either a short sale or a foreclosure.

Either way, it is important for you to consult with your accountant or tax professional as tax laws change all the time.

For a quick reference, visit the irs.gov website for information on The Mortgage Forgiveness Debt Relief Act of 2007 and Debt Cancellation

What is a Short Sale

Qualifications for a Short Sale

The Short Sale Process

Cost of a Short Sale

Timeline of a Short Sale

Tax Implications of a Short Sale

Credit Implications of a Short Sale

Home Affordable Foreclosure Alternative (HAFA) Program

Promissory Notes

Short Sale Frequently Asked Questions

Documents for Sellers

Active-Duty Military: Avoid Foreclosure through the Soldiers and Sailors Act

Foreclosure Prevention Scams

Blog Posts on Short Sales