The tax implications of “Walking away” from a real estate investment

shanNdjones May 22nd, 2010

There’s been a lot of talk recently about investors beginning to “walk away” from their real estate investments that are underwater.  Aside from the moral issue that I discuss here, there can also be tax implications of turning the property back over to the bank.

According this to article, the amount of debt (mortgage) that is “written off,” actually becomes income to you, and must be reported on form 1040 just like any other income.

It’s definitely a good idea to think twice before walking away – whether it’s Uncle Sam, or a higher power – who makes you think twice.

One Response to “The tax implications of “Walking away” from a real estate investment”

  1. # Fannie Mae strategic default policy | The Alba Groupon 25 Jun 2010 at 8:09 am

    [...] mention having the foreclosure appear on their credit history for seven years.  Oh, and there are tax implications, [...]

Trackback URI | Comments RSS

Leave a Reply