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Comment by woofyman | Hacker News Reader

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If the bank sells the house for less than the mortgage, the IRS will consider the difference income.

Known as "cancellation of indebtedness income." https://www.irs.gov/newsroom/home-foreclosure-and-debt-cance...

Foreclosure of non-recourse loans does not trigger cancellation of indebtedness income. Instead, it could trigger capital gains.

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