Posted on: 03rd Feb, 2010 01:44 pm
Hi,
I have rental house in Arizona being foreclosured.
And I receive 1099-A, do I have to pay tax for the deficient and also, will lender go after me for deficient amount in future?
I have rental house in Arizona being foreclosured.
And I receive 1099-A, do I have to pay tax for the deficient and also, will lender go after me for deficient amount in future?
Hi Annie,
If there remains any deficiency from the foreclosure sale of the house, the lender sends you a 1099 A form. However, it does not mean the lender has written off this deficient amount. The lender can still come after you to collect this amount. If he sends you a 1099 C form, it means he has forgiven the debt and will never come after you to recover it. Then, you will be subject to a tax on this forgiven debt as it is considered as your taxable income by the IRS.
If there remains any deficiency from the foreclosure sale of the house, the lender sends you a 1099 A form. However, it does not mean the lender has written off this deficient amount. The lender can still come after you to collect this amount. If he sends you a 1099 C form, it means he has forgiven the debt and will never come after you to recover it. Then, you will be subject to a tax on this forgiven debt as it is considered as your taxable income by the IRS.