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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
Capital gain or loss
The difference between amount realized and adjusted basis on the sale or exchange of capital assets. Long-term capital gains are taxed favorably. Capital losses are deducted first against capital gains, and then again up to $3,000 of other income.
