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Do I pay tax if FMV on 1099A is more than loan balance?

1099A (on a personal residence -non rental)
1099A (an a 100% rental property 1-4 flat)

Part I
Q) if the Fair Market Value is LOWER than the balance of principal outstanding
-how is this reported for a personal residence? a) as a loss or b)as a gain?
or not at all because it was a person residence?

Q) if the Fair Market Value is HIGHER than the balance of principal outstanding
-how is this reported for a personal residence? a) as a loss or b)as a gain?
or not at all because it was a person residence?

Part II
Q) ifthe Fair Market Value is LOWER than the balance of principal outstanding
-how is this reported for a RENTAL PROPERTY? a) as a loss or b)as a gain?

Q) ifthe Fair Market Value is HIGHER than the balance of principal outstanding
-how is this reported for a RENTAL PROPERTY? a) as a loss or b)as a gain?

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi SandyML

As far as I know, if the fair market value of the property is lower than the outstanding balance on the mortgage, it will be reported as a loss. If the lender forgives this deficient amount, you will receive a 1099-c from the lender. If the fair market value is higher than the loan balance, it will be considered as a gain. The lender will give you the excess amount resulting from the sale of the property after satisfying his debt. In case of the rental property, it will be the same.

Thanks.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

N.
Thanks for the reply. After trying to figure this out, I came across this which helped me figure out the "sales" price depending on the circumstances:

FMV is MORE THAN Debt:

(means) the sales price is the amount of DEBT

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- -

FMV is LESS THAN Debt

Box 5 of 1099A (liable for repayment)(two possible answers)

(x) yes (recourse) means sales price is the amount of DEBT

(x) no (non-recourse) means sales price is the amount of FMV
---------------------------------------------------------------------
How does this get reported? sch D. , 4797, 982 or all?
Is it true that if it is a personal property, the T.P. does not have to pay taxes on the difference ONLY ON RENTAL PROPERTY?
SandyML

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

N.

Ok, I am answering my own questions:
If the property is business property, report it on Form 4797, Sales of Business Property, and follow the normal rules. If the property is a personal home, report it on Form 1040, Schedule D, following the normal rules for sale of a main home.

my question remains then is this: when does the 982 come in and how could i learn how to fill it out? and again, on personal property, the T.P. does not have to pay taxes on the difference ONLY ON RENTAL PROPERTY? ???

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Form 982 will come into question when you will be getting exemptions from paying certain taxes. You can contact a tax adviser who will review your situation and tell you how much tax you need to pay.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i received a 1099a on my foreclosed house and the balance in box 2 is less then the amount in box 5 by $30,000. Will i owe that amount to the irs?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi gil,

Has the lender forgiven the deficient balance? If the lender has forgiven the deficient balance, then it might be considered as your income and you may be liable for paying taxes. However, depending upon the Mortgage Debt Relief Act, you may not have to pay taxes on the forgiven debt.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a 1st, 2nd and 3rd. My primary residence was forclosed and the sale amount paid in full the 1st and 2nd. HOwever, I received a 1099a from my 1st and 3rd with both not forgiving any amount. On both 1099a the debt is lower then the sale price with me being liable for the loans. Will I owe the difference between the amounts?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

After reading the previous post from gil regarding the amount in box 2 (debt) is less then the amount in 4 (FMV) of a 1099a....you asked if his debt was forgiven????? wouldn't he have gotten a 1099c if the debt was forgiven??? That is what I thought was the difference between a 1099a (debt is NOT forgivn) and a 1099c (debt is forgivn).

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Guest,

Your query has been replied to in the given page:
http://www.mortgagefit.com/foreclosure/without-debt-forgiveness.html#204127

Take a look at it. Hope it helps you.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What effect on a taxpayer's form 1040 when they receive a 1099-A on a timeshare loan? Not a personal residence, not a business. Thanks for your help

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jan,

If you have received a 1099A form, then it means that your property has been repossessed. If you have received a Form 1099-A, the first thing you must do is to check whether there has actually been a cancellation of debt.

Thanks

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