Author Topic: Reverse mortgage short sale, is debt forgiveness taxable?  (Read 121 times)

rxmurphy

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Reverse mortgage short sale, is debt forgiveness taxable?
« on: February 14, 2018, 05:22:23 AM »
Mom had RM in FL, had to go into assisted living/memory care. Owed more than home was worth, had to do short sale. I am POA, received tax form for amount of debt forgiveness. Her only income is social security and small VA surviving spouse income, both do not cover living expenses. Does she have to file a return? Has not for years as there was no income other than SS.

BTDretire

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Re: Reverse mortgage short sale, is debt forgiveness taxable?
« Reply #1 on: February 14, 2018, 06:52:12 AM »
There may be a couple of exclusions that you might meet.

https://turbotax.intuit.com/tax-tips/home-ownership/how-short-sales-and-foreclosures-affect-your-taxes/L3itburIV
 Note section on 'Mortgage Forgiveness Debt Relief Act'
https://en.wikipedia.org/wiki/Mortgage_Forgiveness_Debt_Relief_Act_of_2007
 I think contract for short sale needs to be signed in 2016, even if sale was in 2017.

rxmurphy

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Re: Reverse mortgage short sale, is debt forgiveness taxable?
« Reply #2 on: February 14, 2018, 10:04:26 AM »
Thanks BTD!