My wife purchased a house for investment more than a year ago. She's been having all kinds of problems with tenants so she decided to short-sale it to get rid of it, especially since it's been vacant for the last 5 months. All her mortgage payments are going down the tube. The house is totally in her name. However, we always file taxes jointly and all our accounts are joint accounts. We know her credit will take a hit if she does this, but will this also affect my credit in any way ? Also, will she be able to claim all the losses on this investment property on her 2009 tax return if she goes through with the sale ? Thanks.

Well your not on the note then in no way will this effect your credit. And I believe you must be the owne a property for six months out of a year to be able to claim it on the following years taxes. So if she sells it now then she will not be able to claim the taxes for this year.