I have a potential short sale coming up and I'm hoping to get a better understanding of what the potential repercussions might be for the seller.  The home was originally purchased as the owners residence but he has long since moved out of state and now lives in Arizona.  The property has been rented since he moved but he has never purchased a home in Arizona so this is his only residence.  My questions are regarding both tax liabilities and deficiencies.  Is there tax liability issues from both federal and state if this is not owner occupied and is there any difference or benefit to a short sale v foreclosure?  Second is whether he is liable for any deficiences since he is not a California resident?  One other strange aspect to this is that there is a second person on title, who is a California resident, but she is not on title.