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  1. #1
    Join Date
    Oct 2019
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    1

    Default Taxation on Short Sale After Foreclosure

    My question involves real estate located in the State of: Iowa

    As a result of a divorce, I was forced into bankruptcy which become final in Feb. 2019. I have a house to sell and I am thinking of doing a short sale if bank agrees at about 35k less than owed if bank agrees. If they agree, will i be taxed on the 35k even though I filed bankruptcy in the same year?

  2. #2
    Join Date
    Oct 2014
    Posts
    7,431

    Default Re: Taxation on Short Sale After Foreclosure

    Quote Quoting ndrod
    View Post
    My question involves real estate located in the State of: Iowa

    As a result of a divorce, I was forced into bankruptcy which become final in Feb. 2019. I have a house to sell and I am thinking of doing a short sale if bank agrees at about 35k less than owed if bank agrees. If they agree, will i be taxed on the 35k even though I filed bankruptcy in the same year?
    Was the mortgage debt discharged in the bankruptcy? Is the home your principal residence? What are your total debts and assets now, including the house and mortgage, and what is the current market value of the home and the current mortgage balance? If you wanted to sell the home, why didn't you you simply do that in the bankruptcy? The answers to these questions will help to determine how the $35k in loan balance that is forgiven in the short sale will get treated.

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