I have a question about reporting short sale on taxes. I sold my home in a short sale in 2018 for thousands of dollars less than the amount I owed on it. We didn’t buy another home, and are renting an apartment. Do I have to report the sale on my return?
- You received a 1099-S or other substitute form.
- You claimed the first-time homebuyer credit.
You should subtract your basis and selling expenses from your sales price to figure gain or loss. When reporting, any gain is taxable. Any loss — Such as when you are reporting short sale on taxes — Is a nondeductible personal loss.
You might also have cancellation of debt. It’s reported on Form 1099-C. Cancellation of debt is taxable in the year the debt was cancelled, unless an exception applies.
If you’ve contributed too much to your IRA for a given year, you’ll need to contact your bank or investment company to request the withdrawal of the excess IRA contributions. Depending on when you discover the excess, you may be able to remove the excess IRA contributions and avoid penalty taxes.
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