Am I responsible for the difference and taxes in a short sale?

Question by JR: Am I responsible for the difference and taxes in a short sale?
I live in San Diego, CA. I refinanced my home in April 2007. I have int. only loan for 435k. I have a short sale approval for 345k. Will I have to pay the difference (90k)and be taxed on the difference? Should I cancel the short sale. What is recommended?

Best answer:

Answer by famfirst
You will most likely get a 1099 from your lender for the difference. You will have to file it with your income tax return next year and most likely you will have taxes to pay because it will be a fairly large 1099 amount.

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