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Form 1099a: How to file taxes after the foreclosure sale

Posted on: 29th Jan, 2009 08:28 pm
I had a foreclosure 5/08, I recieved a 1099-A form. The balance of principal outstanding is $148,000 and the fmv is $165,000 and I a liable for pepayment of debt. This was my primary residence. Will I have a gain or loss when I file my taxes?

Also, I did not receive a 1099-c but I believe because the fmv exceeds the outstanding principal I will not receive one.

Any help would be appreciated.

Thanks
Help, I received 1099a, already filed my taxes then just got this in the mail. I know that I need to amend my 2009 return. What can I expect the IRS to do??
Posted on: 10th Feb, 2010 06:39 pm
Hi Earlene,

The 1099A form has been sent to you for informational purpose. Since the fair market value of the property is more than the principal outstanding balance on your mortgage, you have no income and thus, you do not have to pay any tax on the difference. However, if the fair market value of the property were more than the loan balance, you would have to pay tax on the difference and you had to file form 982 with your tax return.

Hi bob,

It happens with many tax payers. So, there is nothing to be worried about. If you received a 1099A form after you filed your tax return, you will have to file an amendment using a 1040X form as well as a new 1040 form. Once you file the amended tax return, it will take about 8-12 weeks for IRS to process.
Posted on: 11th Feb, 2010 11:35 pm
My client received 1099 A with the balance of principal outstanding totaling $369,883.30 and the FMV totaling $215,000. How will this affect his taxes?
Posted on: 21st Feb, 2010 07:54 pm
Hi Manapua,

Your client received 1099A from the lender due to the foreclosure of the property. Since the fair market value of the property at the time of the foreclosure sale was less than what you owed, your client is responsible for the rest of the balance. This balance amount is viewed as his taxable income and he needs to report it to the IRS. However, if he used the property as his primary residence, he can avoid paying taxes on this income under the Mortgage Forgiveness Debt Relief Act of 2007.

Thanks

Jerry
Posted on: 22nd Feb, 2010 11:45 pm
I am trying to help someone with their 2009 taxes. They received a 1099-A with the Balance due at approx 164K and the FMV at $100. How do we record on the 1040?
Posted on: 15th Mar, 2010 01:14 pm
Hi Karen,

The lender sends the 1099A Form to the borrower and to the IRS to report the foreclosure of the property. If the fair market value at the time of the foreclosure is lower than the mortgage balance you owe, the difference would be seen as your taxable income and you will have to report it as "other income" on the Form 1040. If the property was used as a rental or a business property, the income will have to be reported on schedule E and C, as applicable. However, you do not have to pay taxes if this difference is forgiven, provided you used the home as your primary residence and the debt was canceled after 2006.
Posted on: 16th Mar, 2010 12:04 am
I received a 1099-a with the balance of $101,064, and the FMV of $65,500. I did not receive a 1099-c. how will this affect my taxes?
Posted on: 15th Apr, 2010 12:13 pm
To Guest,

If the outstanding balance on the loan as mentioned in Form 1099-A is more than the FMV of the property, you owe the difference. But this does not necessarily mean that this difference has been forgiven by the lender. Unless it has been forgiven, it cannot be considered as your income. You need to talk to your lender and ask them if they are going to send you a 1099-C Form.
Posted on: 22nd Apr, 2010 03:29 am
Received 1099-A, no 1099-C as yet. Home was my primary residence. I rented out the top floor and lived in basement. Do I have to recapture the
depreciation taken over the years, even though the house was foreclosed and I am insolvent.
Posted on: 26th Jul, 2010 03:31 pm
I found this info on irs.gov

Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

***** Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
***** Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
* Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
Posted on: 14th Oct, 2010 12:48 am
my balance was 150,877.74 and the fmv was 0.00? what does this mean and do I have to pay taxes on this? it is in tn. and a foreclosure and I received a 1099-a.
Posted on: 26th Jan, 2011 05:47 pm
Hi runnert!

Welcome to forums!

The FMV can't be zero. You should contact your lender and check out the exact FMV. If the lender has not forgiven your deficient balance and if you have paid off the dues in full, then you won't have to pay any taxes.

Feel free to ask if you've further queries.

Sussane
Posted on: 26th Jan, 2011 09:16 pm
IF THE FMV IS LOWER THAT THE BALANCE AND YOU FILED BANKRUPTCY WILL YOU HAVE TO PAY TAXES ON THIS?
Posted on: 28th Jan, 2011 04:19 pm
Welcome dianna,

If the deficient balance is forgiven by the lender, then you might be responsible for paying the taxes on that amount.
Posted on: 28th Jan, 2011 08:29 pm
My sister had her home foreclosed on in july 2010. She received an 1099A and is responsible for the debt. Her debt is lower than the FMV. Will she have to pay in on her taxes due to the foreclosure?
Posted on: 01st Feb, 2011 04:07 pm
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