Tax implications of a default

I hope you have enough money left for a good accountant. Seriously. Find one now--not in April.

i do have one. am definitely going to call him, but wanted to solicit opinions of people who might been through this drill already.

Thanks.

tax atty/accountant...

i wouldn't trust any accountant 100% without seeking other sources of info. i'd call the IRS directly and ask. you are among another million or so struggling investors so they have to be used to the question.

the debt you didn't pay i'm pretty sure will be included in your taxes as "income" given that it wasn't your main residency. so you might have to pay income taxes on that due to "debt forgiveness".

"Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on IRS.gov."

http://www.irs.gov/pub/irs-pdf/f982.pdf