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What are the Tax Liabilities of a Santa Monica Short Sale?

usually one of the last things they want to do. No one wants to lose their home, but if you find yourself in this situation, a Santa Monica short sale is the way to go. Due to the  Mortgage Debt Relief Act of 2007, taxpayers are usually excluded from the debt from their principal residence. You can find more information on this in Publication 4681 on the IRS website. It’s called Canceled Debts, Foreclosures, Repossessions, and Abandonments. You can also ask your accountant to use Form 982 when you file your tax return. It is always a good idea to speak with your financial advisor or accountant to find out the amount of a Santa Monica short sale tax consequence if any.

If you are considering a Santa Monica short sale on your home you may have several questions about the process. One question that comes up a lot is about homeowners being current on their mortgage payments. They usually wonder if they would still be allowed to complete a Santa Monica short sale if they are current. This really depends on who your lender is, but typically the answer is yes, you can still short sell your home. Your lender will look for a legitimate hardship and determine why you can no longer afford your monthly mortgage payments. Then they will most likely agree to a Santa Monica short sale. Lenders are more likely to agree to a Santa Monica short sale than a foreclosure because they will lose less money on the transaction. Remember, a short sale has less of an impact on your credit than a foreclosure usually does. This is another reason why homeowners typically prefer a Santa Monica short sale over a foreclosure.