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"Forgiven" loan will have consequences... (by Robert C.):

This debate about what is and is not taxable is important to nail down before making a decision on how best to proceed.

The Mortgage Forgiveness Debt Relief passed in 2007 law waived the provision in which the IRS considers forgiven mortgage debt as taxable income. Previously, homeowners who negotiated a deed in lieu of foreclosure (WDIL) would have had to claim the forgiven amount as income and pay taxes accordingly. This act was in effect for mortgage debt forgiven from 2007 through 2018, provided the mortgage was on the owner’s primary home. Let me repeat that: "provided the mortgage was on the owner’s primary home." Forgiveness on a timeshare DID NOT apply, thus the debt forgiveness on a timeshare would be considered income. Said differently, forgiven debt on mortgages for secondary homes and on home equity loans not used to improve a primary residence would be taxed as income.

I am not up on the latest tax law so best you talk to your CPA for the latest.