I bought my principal residence for 350 thousand. I had to short sale for 250 thousand. Roughly 100 thousand was forgiven by the 1st and 2nd banks (I had 2 mortgages originally). Never refinanced. It was my principal residence. It's my understanding that i will NOT have to report this as taxable income due to the relief act. Is this correct?
Yes, that is correct. You will, however, have to file IRS Form 982 along with your tax return.
THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. Answering this question does not create an attorney-client relationship or otherwise require further consultation.
Under this act you are allowed up to $2,000,000 of federal debt relief before you are taxed. So yes, this is correct for federal tax purposes.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.