Let's get the business out of the way first. I am currently awaiting a phone call from my accountant about whether or not we will owe $22,000 in taxes this year. Why you may ask? Well it's all about that forgiven second mortgage.
See the deal is that the tax exemption is only on mortgage loans forgiven for the purpose of initially purchasing the home. Since we took out the loan after the purchase... after we had put down $140,000 on the house and had no cash left, we will now owe taxes on the forgiven amout. So apparently taxes on $79,000 for us comes to around $22,000.
Is there a way out of this mess? Our accountant is looking. Since it is spring break around these parts I probably won't hear from him this week. I'm on pins and needles. Needless to say we don't have an extra $22,000 laying around. I'm not sure how the IRS handles that sort of thing, but it will be an interesting ride and I will document it all for you here.
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