Posted on: 05th Feb, 2010 06:16 pm
We are planning on filing chapter 13 in the next few months, and ccurrently working out a Deed in Lieu of With BofA on a Rental property. Is it better to include the Rental property in the BK to avoid having to pay taxes on a 1099-C. Or does it matter.
Hi atc,
Since it's a rental property, the discharged debt from the deed in lieu will not be subject to any exclusion under the Mortgage Forgiveness Debt Relief Act of 2007. But if you include the debt in bankruptcy and it is discharged, you will not be liable to pay taxes on the discharged debt amount. Thus, I think you should include the rental property in bankruptcy. However, you should consult with your bankruptcy attorney before including it in Chapter 13.
Since it's a rental property, the discharged debt from the deed in lieu will not be subject to any exclusion under the Mortgage Forgiveness Debt Relief Act of 2007. But if you include the debt in bankruptcy and it is discharged, you will not be liable to pay taxes on the discharged debt amount. Thus, I think you should include the rental property in bankruptcy. However, you should consult with your bankruptcy attorney before including it in Chapter 13.