I recently had a client that had a condo foreclose on him. My client owed about 100k on a 30k unit. Needless to say he was under water on the investment. He didn’t have to worry about an Arizona deficiency judgement because of Anti-deficiency statues but he did have to pay taxes on the deficiency amount. Taxes on 70k is estimated to be between $3-8k dollars.
There is no way to avoid this tax. IRS will find out once the lender sends a 1098 closing statement out at the end of the year. My advice would be to limit your deficiency amount by short selling the home for the highest price possible. You can easily save yourself between 1-3k just in taxes by cleaning the property and making it presentable to buyers instead of letting the property go to foreclosure and sell as an REO for the lowest amount possible.
If you are needing a short sale realtor, please don’t hesitate to call our office. We’ll be more than happy to get you started in the right direction. Broker Executives, Inc. 480-297-2008
Resident of Phoenix Area for over 10 years, I know the Valley of the sun! I have over 5 years in real estate and over 4 years in mortgage financing. Rest assured, I can help you find a home. Whether you're buying or selling, I'm always on the ball and are prompt to answer questions either by phone or email. Please email or call me if you have any questions. My mobile is 480.297.2008 