Do I pay tax if I get a 1099-A Form after deed in lieu?

i read some more about this bill. it stated that this bill was created to help families who would refinance their mortgage and pay no taxes on any debt forgiveness. in my case, we had moved into another house and rented the house we lost on land contract. when those people failed to pay, we had no choice but to give the deed to the lender. we did not refinance the house we lost. will this relief act still apply to me? help!

Diane - here's some verbiage from the actual bill itself. I do not see a reference that the debt had to result in refinance. It does however specify that it needs to be your primary residence. It sounds like this was not your residence at the time of the surrender so you more than likely will not be eligible for the protection on the entire amount - see section 4. It does appear that you might be eligible for partial foregiveness. I would advise you to speak to a tax professional and get their opinion. You might still have some recourse if you can prove that you are insolvent (meaning you can't pay)

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as found on site http://www.govtrack.us/congress/billtext.xpd?bill=h110-3648

i rented a home and had to pay remax a 1,400 brokers fee 1st and last months rent. is this fee tax deductable. thank you

Hi Diane,

You need not pay the deficiency in a deed-in-lieu and under the current laws, you will not be taxes by the IRS for not paying the deficiency. I hope I could clear the confusion.

Feel free to discuss further

good luck

Diane,
Debt Forgiveness Relief Act does exclude you from paying taxes on a foreclosed mortage, but you do have to report it on IRS form 982. You should go to a CPA and have your taxes done to make sure it is done correct.

Hi Jesse,

Welcome to the forum.

Good info. Seems you have sound knowledge regarding law. Why don't you join this community and share your knowledge and help people who are in need of your knowledge. It will be great if you join this community and I hope hundreds of people will be beneficial with your sound suggestions and valuable information :)

You also introduce yourself at http://www.mortgagefit.com/introduce-yourself.html
and let others know about you.

Best of luck,
Larry

Is this done for 2010?
If it is, what does that mean for someone that does the deed in Lieu?
Are you saying the difference in your loan balance and what the bank recovers for the property is taxable to the morgagee? How long of a period of time are we talking?
Thank you.

hi roxanne,

as far as i know, the mortgage debt forgiveness relief act is in vogue till 2012. in case of a deed in lieu of foreclosure, the deficient balance is forgiven by the lender. this forgiven debt is considered as an income by the irs and you may have to pay income tax on that amount. however, due to this law, you won't be liable for paying the taxes.

thanks

I want to do a DIL and a person from my bank told me today that I have to first put my house on the market at fair value for three months and vacate the house before they will let me apply for the DIL. Is this true?

Hi marionjk,

As far as I know, you will have to list the property in the market for 90 days before you apply for a deed in lieu of foreclosure. However, I don't think you will have to move out of the property before applying for a deed in lieu of foreclosure.

Thanks

If you want to understand more about this you need to visit the IRS website as many people are miss informed and do not know what they are talking about. It is always best to seek a tax accountant's help if you have tax questions. This forum is for general mortgage questions and not a tax forum. Always go to the correct source before making a decision. Nothing worse than perhaps listening to the wrong people and regretting it.

ok i am confused still i am doing a deed in leiu. i owe 95,000 and the appraisal came in at 75,000 what will i be 1099 for and how will that affect my taxes next year will i owe irs a ton of money?

Hi shawni,

In a deed in lieu of foreclosure, the lender won't come after you for the deficient balance resulting from the property sale. It will be forgiven and will be considered as your taxable income. However, depending upon the Mortgage Debt Relief Act, you won't be liable for paying any taxes for the forgiven deficient balance.

Thanks

If it is your primary residence you won't have to.... if it is not your primary residence.. you will have to.. but there are ways around it (being insolvent) and... i can't remember the other one... see a CPA this year for your taxes!

A year ago I relinquished my home (condo) in a deed-in-lieu. The fair market value was 95,900.00 the the balance of principle is 105,826.25. I received a 1099a do I have to place the difference on my taxes. I am a 77 year old retired person who works occasionally part-time. Thank You.