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Tax Break for Mortgage Debt Forgiveness

Posted on: 21st Dec, 2007 05:20 pm

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I recived 1099-c for property wich was close as ded off lieu.Bank send me 1099-C amount witch never egsist.Pay tax on diference I understend but not on amount wich iz for 1/3 higer from orginal purchesing price 115,ooo down payment 17,ooo and loan start with 97,5oo,oo. balance of loan is 89,123,00, fvm is 33,000 and my 1099-c box 2 ask for thet amount.
Posted on: 10th Apr, 2011 04:27 pm
Hi Guest,

The deficient amount resulting from the deed in lieu is the difference between the amount owed to the mortgage lender and the sale price of the property. However, depending upon the Mortgage Dent Relief Act, you won't be liable for paying off any taxes on the deficient balance.

Posted on: 10th Apr, 2011 10:35 pm
anyone have any information on whether there is a similar act for debt forgiveness in New York, for state taxes?
Posted on: 13th Jun, 2011 12:46 pm
Welcome mike,

The Mortgage Debt Forgiveness Act is valid in all the states till 2012. You can contact a tax advisor based at New York and he will further guide you in this regard.
Posted on: 13th Jun, 2011 11:18 pm
we have been approved for this :) my question is this....we bought the house for two hundred seventy five thousand. 10 yr intrest only, house is valued at two hundred three thousand and we still owe the 275. So I'm thinking we won't have to pay anything on unearned income?
Posted on: 29th Nov, 2011 06:45 am
welcome leona,

in case of a deed in lieu of foreclosure, the lender won't come after you in order to recover the deficient balance resulting from the sale of the property. as far as the forgiven debts are concerned, you won't have to pay the taxes depending upon the mortgage debt relief act.
Posted on: 29th Nov, 2011 08:58 pm
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