Short sales are voluntary and require approval from the lender. Foreclosures are involuntary, where the lender takes legal action to take control of and sell the property. Homeowners who use short sales are responsible for any deficiencies payable to the lender.

How long does a short sale stay on your credit?

seven years
Because short sales and foreclosures both fall under this umbrella category, most lenders won’t distinguish between the two, and both stay on your credit reports for seven years. Here’s how a short sale works: When you sell your house, all proceeds usually go to the lender.

What happens when you short sale a rental property?

Also, if you bought the property as a primary residence, then turned it into a rental, you still qualify for the Mortgage Debt Relief Act whether you need it or not. When you short sale a property, the Bank agrees to take a loss equal to the amount you are “short”.

How long can you rent a house before selling it?

You could live in it for two years and then rent it for three years and then sell it (so long as it is sold within the five year mark from when you first lived in it as your primary residence). See this IRS link for more information on the exclusion: If you rented the home before selling, then enter your home sale under the rental section.

How to report the sale of rental property I lived in?

Select “Yes” to Home Sale under the Sale of Assets section under Rental Summary Screen. To enter this transaction in TurboTax, log into your tax return and type “rental (schedule e)” in the search bar then select “jump to rental (schedule e)”, TurboTax will guide you in entering this information

Is it a good idea to sell your rental property?

Should You Sell Your Rental Property, or Keep Holding On? Rental properties can be a lucrative investment, providing a steady stream of income from rent payments and price appreciation — that is, if everything goes according to plan.