taxes on short sell

[Sw3tflower]

What is the name of your state (only U.S. law)? Calif
I separated from my husband in 2008 and for the first time in 30 years am filing separate taxes. My sole income for 2009 was temporary support.
We short sold our home in November 2009 by about $250,000. The bank said they 'forgave' us the difference we still owed them.
How do I report that on my tax return or do I?

 

[LdiJ]

What is the name of your state (only U.S. law)? Calif
I separated from my husband in 2008 and for the first time in 30 years am filing separate taxes. My sole income for 2009 was temporary support.
We short sold our home in November 2009 by about $250,000. The bank said they 'forgave' us the difference we still owed them.
How do I report that on my tax return or do I?

You don't report that on your tax return until you receive a 1099C from the lender. If you didn't receive one for 2009, then you will likely receive it for 2010.

 

[FlyingRon]

Note however, that the "short sell" doesn't change the capital gains. If your basis (the purchase price plus improvements) is less than you sold it for you may have issues there. Of course, if it was your principal residence for the past two years you probably have enough exclusion to not have to worry about it (notwithstanding that you still have to report the sale of your home on your taxes even if there's no tax due).

 

[Sw3tflower]

It was my husband's primary residence till it sold. I moved out near the end of 2008. (Sept 2008)
It sold for about $500,000 over our purchase price plus improvements, but $250,000 less then we owed to the bank.
Since I did not live in the house the last year but husband did, will that affect the amount I will owe as compared to my husband?

 

[FlyingRon]

It was my husband's primary residence till it sold. I moved out near the end of 2008. (Sept 2008)
It sold for about $500,000 over our purchase price plus improvements, but $250,000 less then we owed to the bank.
Since I did not live in the house the last year but husband did, will that affect the amount I will owe as compared to my husband?

The rule is it had to be your principal residence for 24 out of the prior 60 months (and that you didn't take the exclusion for another property in the previous 24 months). It doesn't have to be the LAST 24 months. You each can exclude $125,000, if that is the case.