If you owe more than your home is worth, there may be more options than you know. One such option is a short sale, in which the bank agrees to allow you to sell the home for less than the mortgage balance owed.
If the home is your primary residence, you may also be exempt from paying taxes on the forgiven debt.
What does this mean? If the lender forgives $10K in debt, the IRS may treat this as income, meaning you could owe taxes. This Act – the Mortgage Debt Forgiveness Act – is meant to exempt you from those taxes (provided you meet the conditions, etc.).
Questions? If you’re in Colorado, I’d love to help. If you’re in one of our sister states, let me know and I will connect you with the local agent!
This is not legal advice. Always consult a CPA, Attorney and local Realtor as needed!