Debt Forgiveness Act

Q: I bought a house with friend as tenants in common 3 years ago. We both lived in the house for 1 year, then I tranferred (military) while he continued to live in the home for another year. After 1 year he stated he was filing for bankruptcy. I had him quitclaim the property to me, then tried to re-finance but was denied. My house is currently going through a short sale. Question: Do I qualify for the new Debt forgiveness act that passed? Technically, we (the owners) lived in the property for 2 years before I took him off title. He is still on the loan.
A: You might qualify for some of the new Debt forgiveness act. The fact that you lived in the house for 2 years applies to a capital gain exemption that is seperate from the Debt forgiveness act & has no bearing with your liability for funds not collected from an approved short sale.Since you were1 of 2 owners for most of the time you had title to the property & both obligated on the mortgage, the liability could be split, how that pertains to you & your taxes specifically might be a matter of interpretation. Since your friend / co-owner have different tax circumstances (he is filing for bankruptcy & you are not) , I suggest you consult a qualified tax advisor.