My wife and I are considering a short sale on our home in Westwood. What are the tax obligations we may face?
The short answer is that it depends on the circumstances and you should check with a tax accountant on this issue. Generally, with regard to federal sales taxes, your liability depends upon whether the Westwood home is a primary residence or not. If your Westwood home is your primary residence, The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt. The act applies to debt forgiven in the calendar years 2007 through 2012. If your Westwood property is not your principle residence, you will be paying taxes on the short sale deficiency that is forgiven unless you fall into one of the exceptions to this general rule. Once again, we recommend that you speak to a qualified tax professional who is well versed in this area.
The Westwood, MA Real Estate Attorneys at Goldman & Pease provide legal services to individuals and businesses for all real estate transactions in Westwood and the surrounding communities including Dover, Needham, Dedham, Canton, Walpole and Medfield and the entire Boston metro region.