We are seeing many more homeowners walking away from their properties. The fact is, taking a “Deed In Lieu” could affect your credit for years to come. You should consult an attorney or your tax consultant prior to leaving the property. We would still recommend a “Short Sale” with a Realtor who holds the certification “Certified Distressed Property Expert” (CDPE). These agents are trained in the Short Sale process and will be able to answer many questions. Many lenders are now “offering” loans to our clients after a successful short sale. One issue required to be approved is that during the process of a Short Sale, you could not miss a payment. I realize that this does not answer your question about Tax Issues, with that in mind, you should always consult your tax consultant or an attorney.

Best of luck…