No Income Tax on Short Sale or Foreclosure — For Now   Question: We bought our Mesa home ten years ago. The purchase price was $320,000. Our mortgage was $300,000, interest only, payments for ten years, and then amortized over the next fifteen years. Our home is only worth $240,000 today. Although we have been able…

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The Mortgage Debt Relief Act (“MDRA”) enacted in 2007 was scheduled to expire December 31, 2012.  In the “fiscal cliff” legislation just enacted by Congress, however, the MDRA has been extended until December 31, 2013.  Therefore, after a foreclosure or a short sale of a home in Arizona, any debt forgiveness of a mortgage loan…

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