Foreclosure hurts—there’s no way of sugarcoating it.
First, you lose the property. And then there’s the tax law waiting to take a bite out of you, too.
Under the tax law, when you lose your rental property to foreclosure, you
have a taxable gain or a deductible loss on the foreclosure sale of your property,
may or may not have cancellation of debt (COD) income, and
may or may not pay taxes on the COD income.
But if you know what you’re doing, you can limit the negative tax consequences and even come out ahead. ... Log in to view full article.