Short sale debt forgiveness not to be taxed
Here’s the rare case of a story that gets resolved before I get a chance to print it.
I recently found out that state Department of Revenue officials had determined debt forgiven as part of a short sale was subject to real estate excise tax. Short sales are where owners who owe more on their mortgages than their homes are worth get their lenders to agree to accept the proceeds of a sale at current market value.
‘According to our interpretation (the tax) is based on what the seller receives,’ Department of Revenue spokesman Mike Gowrylow told me last Friday. ‘What the seller’s receiving is the sales price of the property plus whatever debt is forgiven”
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