Need to short sell on my house what are my tax issues if any?

Alvina
I am in a forclosure situation: Purchase Price: 275, 000 (2004)Refinanced in 2005 and took out a HelocHeloc: 100, 000My estimated price for selling is going to be 330, 000. Will I have to pay any taxes on the potential sell of my house. If so are there any ways out ie: proving financial hardship.

Felisa
You will have a gain on the sale of about $55, 000 ($330, 000 - $275, 000). Whether this will be taxable or not will depend upon the facts however you should qualify for the exclusion if you lived in the home for at least 2 years. On the short sale you may have a debt forgiveness. How much that will be will depend upon the wording of your mortgage and the HELOC and the total debt oustanding. If the mortgage and the HELOC are without recourse, there will be no debt fogiveness and therefore no taxable gain. If they are with recourse, the total debt less the sale proceeds will determine the forgiven debt and the taxable gain.The gain on Cancellation of Debt is not subject to the capital gain exclusion. You can avoid the tax bite on it if you were insolvent at the time of the COD. You are insolvent if your liabilities exceed the value of your assets. File Form 982 with your tax return along with a statement of your assets and liabilities immediately prior to the COD to claim exemption from tax on the COD. If the amount of your insolvency exceeds the COD there will be no taxable gain. If it's less, the difference is taxable to you as ordinary income.

Izetta
your tax liability is depend upon your status (single, married) and other certain provisionsthen no tax is levied up to 250, 000 gain in case of single and up to 500, 000 in case of joint return if you are living in this for 2 out of last 5 yearsif you are single using this house as your residence for at least 2 years since you have purchased it then no tax is levied up to 250, 000 gain in case of singleif you are married, you and your wife is using this house as your residence for at least 2 years since you have purchased it then no tax is levied up to 500, 000 in case of joint returnif you are single and recently married using this house as your residence for at least 2 years since you have purchased then you should file separately to claim the exemption up to 250, 000 gain for further you can contact me