When faced with losing your Arizona home it’s hard to think of any option as having a benefit. But this is no time to be in denial – it’s time to look at all of your options and pick the one that will have the best possible outcome for you and your family.
For example, most people don’t realize that there is a tax advantage to filing for bankruptcy rather than allowing your home to go into foreclosure. If your home is taken back by the bank, the bank will try to resell the home at a loss. Any loss they take above and beyond what you still owed on your original mortgage is considered your income by the IRS. The same holds true for a short sale.
While congress has temporarily granted a blanket forgiveness of this tax liability, it is only for money spent on the home purchase or home improvements – not the home equity loan you took out to pay for a trip to the Bahamas, or even your child’s education.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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