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Level 2

Re: Rental property short sale tax ramifications

We sold several rental properties this year on a short sale. We were able to take an accelerated depreciation over the last ten years because of where the houses were located (Go-Zone). The lender has chosen to forgive the debt. I am trying to figure out what we will face in our tax situation at filing time next year. 

Example Property:

Purchase Price $45,000

Sales Price $17,000

Accelerated Depreciation $25,000

Forgiven Debt $28,000

Any tax experts have an idea what the tax situation will look like? 

I would love any input!!!

Thank you!!!!!