If you filed bankruptcy on a rental property and you short sale it will you still have to pay taxes on a 1099.

Asked over 3 years ago - Bakersfield, CA

The IRS has a form 982 that says if you filed bankruptcy you don't have to pay taxes. Does this include a rental property. I used to live in it for 13 months. I only rented it for 18 months. Could someone please advise me.

Attorney answers (3)

  1. Frank Wei-Hong Chen

    Contributor Level 20

    Answered . No. Debts discharged through bankruptcy (including on rental property) are not considered taxable income. This exception is discussed in detail in IRS Publication 4681:

  2. Theodore Lyons Araujo

    Pro

    Contributor Level 20

    Answered . The regulations where changed in 2007. Why do the short sale anyway? Makes no sense for the homeowner if you are going to file bankruptcy.

  3. Dorothy G Bunce

    Pro

    Contributor Level 20

    Answered . See my answer to the question you reposted a few minutes after this post.

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