Lest you forget, if you owe 500, short-sell your house for 400, there is a 'capital gain' in the tax-mans' eyes of 100k. As of now, the income tax on that gain has been waived. Unless that law is extended, we would have to pay the taxes on that 100k gain.
I'm not trying to scare someone into putting their home on the market, but it is definitely something to consider. Whether your home is foreclosed upon or sold in a short pay-off scenario....no capital gains taxes are due....as of this moment.
Read the full article if you wish here:
This is scheduled to change at the New Years Bell Dropping of 2013!