Should I Sell My House at a Loss?
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Yes--Temporary Tax Relief
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According to the Internal Revenue Service, Congress passed the Mortgage Debt Relief Act in 2007 to eliminate the tax burden of selling a house at a loss--usually called a short sale. Normally, settling with a bank to sell a house for less than the value of a mortgage is considered income, but until 2012, you can short-sell without a tax penalty.
No--May Not Be Able to Write Off a Loss
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If you sell a home at a loss, you probably won't have the option of writing off the loss on your taxes, according to Smart Money. In addition, the Mortgage Debt Relief Act does not cover dwellings you own other than your primary residence.
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Bottom Line
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Depending on your financial situation and your local housing market, you may have to sell your home at a loss. If your house stays on the market too long or you do not receive enticing offers, consider renting it until the housing market ticks up again, according to MSN Real Estate.
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