A question that often comes up when contemplating a short sale is the matter of how forgiven debt is viewed by the IRS. Prior to the Mortgage Forgiveness Debt Relief Act of 2007 any forgiven debt was considered taxable as income. In most instances that is no longer true. Check out IRS page – Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form

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