...the sheriff sale.? I am curious to know what the tax ramifications will be. I am certain the bid what was owed on the property including all of their legal expenses, late fees, etc. If they sell it for much lower, will they automatically "forgive" the debt thereby causing me a big tax burden? If they don't forgive the debt, is it just let go and the bank accepts the loss? What is the next step? I am f'ed financially as my foreclosure is an example so I can't take paying capital gains on say 0,000. I have read that if they don't agree to a short sale prior to foreclosure and they don't sue for a deficiency judgment then I'm in the clear. I've also read otherwise. Please help!