After a short sale you will lose the deductions you have been taking from owning your home, so you will need to consult with your tax advisor regarding a possible increase to your withholdings rate and/or some other creative possibilities, such as increasing your 401K contributions. These changes can offset your taxable income in the same way your itemized deductions did in prior years. Budgeting becomes key so it is always a good idea to meet your tax advisior for a budgeting meeting prior to renting a house. This will tell you what you are eligle to do for retirement savings and you can construct your new budger from there.
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