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Tax Implications of a Deed in Lieu of Foreclosure (or short sale)
 
 Q. Are there tax implications when an owner gives a lender a deed in lieu of foreclosure to avoid a foreclosure proceeding?
My answer  included information about preforeclosure short sales, too, but the reporter chose not to include this information.  Frankly, I haven't seen too many DILs.  Many people are under the mistaken belief that accepting a Deed In Lieu of foreclosure is commonplace.  But it's not.  Not yet, anyway.  Lenders would much rather entertain a preforeclosure short sale than take the deed, and take back the property without first an attempt to sell.
 
 
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