Skip to main content

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation - probably pretty basic

Seattle, WA |
Filed under: Debt

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?

Attorney Answers 2


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.

Mark as helpful

1 found this helpful


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.

Mark as helpful

1 found this helpful

Bankruptcy and debt topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics