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Primary residence, first time buyer, purchased condo at $298K in August 2006. Had 80/20 option ARM, both lenders finally agreed to short sale. Property will be sold by end of this month for $145K. How do I make sure that I don’t end up paying taxes for the difference? Am I covered under the Debt Relief Act?
Your best bet is to use a QUALIFIED accountant, who is very well informed of the intricacies of the 1099C’s that you will receive and how to use the MDRA of 07 as protection. I would not recommend trying to do it yourself, as you may end up being liable for well over $150k in income, as the $145 is only the sale price, not the net to the lenders. Good luck
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