Deduct an expense I actually never paid.  Wow, what a great tax planning concept.

An oldie, but a goodie.   And 'ANYTHING' posted by Dave Fogel is gospel.  If you have further questions, google him to find his website which is chock-full of all things related to COD issues.

http://www.taxalmanac.org/index.php/Discussion_Mortgage_Interest_for_year_of_short_sale.html