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Submitted By: HC
Answered: February 4, 2014 8:30 am
Answered: February 4, 2014 8:30 am
I am underwater with my home mortgage and I’m working on closing a short sale. Does the tax-free treatment of debt forgiveness rule apply in 2014?
The favorable rule allowing debt forgiveness on a principal residence mortgage up to $2 million expired at the end of 2013. It could be extended, but given the resurgence in the housing market, it may not be included in a package of extenders this year. Stay tuned!
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Tax Glossary
Installment sale
A sale of property that allows for tax deferment if at least one payment is received after the end of the tax year in which the sale occurs. The installment method does not apply to year-end sales of publicly traded securities. Dealers may not use the installment method. Investors with very large installment balances could face a special tax.
