Question: We just completed a short sale on a home financed by our bank. We are getting another home as a gift in a few months. Can the bank come after us because we now own a home debt-free? Our old home was purchased using a standard loan that we refinanced. We sold the home for about $60k less than what we owed to the bank. My wife is unemployed and cannot work due to a medical disability.
Response: No, that shouldn't be an issue since at the moment you did a short sale on your home, you did not own another asset. Once you do a short sale, the amount that is forgiven gets reported to the IRS as a taxable income. But if you did a short sale this year on your primary residence, any debt that gets forgiven is not subject to capital gains and you won't have to pay any taxes to the IRS in relation to the short sale.
In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.
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