Larry, I own a piece of property that I owe about $30,000 to the bank. I paid about $10,000 for the property about 10 years ago. Here is the deal. I have an offer of $30,000 on the property. If I had the buyer pay a note directly off for me, would the sale have to be reported to IRS?
Oscar
Oscar, the payment to the bank would be considered income to you and you would have to pay tax on the gain just like if you received the proceeds. The IRS considers relief of debt (the pay-off of a loan) to be the same as a cash sale.
Larry Kopsa CPA
