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2008 $7500 Tax Credits for buyers that they had to pay back when they sell their home...NOW SHORT SELLING???

Posted by Jessica Eisenhauer on September 21, 2011 at 5:37am in Short Sale Discussions
So I have a seller who is short selling their home.  They were part of that original group that got the $7500 tax credit for purchasing a home, the group that had to repay it (before the next group that got 8K and didn't have to repay)... remember that???  Well what happens now that they are short selling their home.  Do they still have to pay that back when they "sell" the property???   I know if you are deemed insolvent you don't pay tax on the amount forgiven and the 2007 Debt Forgiveness Act..  But what about this particular senerio.???   Any info would be greatly appreciated!

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Tags: $7500, Credit, Repayment, Tax
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  • cesar llanes September 21, 2011 at 10:31am

    I suggest that you inform your client to seek advise from their CPA or their tax preparer. Theword " insolvent" on your statement could only be properly defined by a CPA. I had that question and I had different answers.

     

    You may want to research that topic from the IRS web site too.

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