Hubby and I got a bit of good news when we were having our taxes done last weekend. When the supervisor came into the room to review the initial prep-guys work, he looked at our rental property information and said, "Oh, you moved and are renting your old house? You did that right." We were reminded of a comedian we love (Brian Regan, in case you're interested). Both of us thought, "Yeah, I'm glad I did that....did what?"
It turns out that if you sell a house with negative equity for less than you owe, you just take a regular loss. Ouch, right? But if you sell a business property (read: rental) for less than you owe, it can be written off as a business loss. Can I say yay?? Basically, since we've already rented it out for six months, it shows that it was our intention to treat it as a rental property. We could list it any time now and write off the difference between what we receive and what we owe.