27Feb/102
I had a home that was abandoned and foreclosed in Indiana Last year. What is my tax situation?
hideho&awaywego asked:
I left Indiana with an exhusband who wanted to keep the house and did, but never made a payment. Then he skipped town. The house foreclosed and I received a statement stating the value and the debt, but nothing else. I don't know where I stand on filing with the IRS. Help!
Ron
I left Indiana with an exhusband who wanted to keep the house and did, but never made a payment. Then he skipped town. The house foreclosed and I received a statement stating the value and the debt, but nothing else. I don't know where I stand on filing with the IRS. Help!
Ron
March 2nd, 2010 - 08:02
Samuel
Usually if the bank take y’r house then they would proceed with getting back as much they can on the loan value unless there’s a profit then u get ditto! The local tax will get sum and then the bank and then u out of luck!
March 4th, 2010 - 08:26
Lester
Generally, if the lender forecloses on your property, the IRS treats it like a taxable sale or exchange, from which you may have a gain or loss, even though you did not actually sell the property. It is important that you check if the loan you had was nonrecourse or recourse. If your loan was a nonrecourse loan (mortgage secured by your home), you treat the foreclosure as if you sold the property at the fair market value. If your loan was recourse debt (meaning you are personally liable for payment) you may have to figure out if you owe taxes on income realized from cancellation of your debt, in addition to the gain or loss. It sounds so unfair, but you won’t realize this taxable income as long as the value of the home is more than the value of the debt cancelled.
You should definitely consult with an experienced CPA to make sure you’re filing everything correctly. If you feel overwhelmed just relax and file for an extension. It’s better to get everything right the first time. Good luck.