Posted on: 15th Feb, 2009 05:23 pm
i was wondering i just did a deed in lieu of foreclosure in mi on feb 2nd 2009 on my home that we lived in for 6 years. i already filled my taxes for the 2008 tax year. before i did the dil i had to pay down on my second mortgage to have that bank cancel that debt so i could proceed with the dil. that was done nov 20th 2008 so i did recieve a 1009-c cancellation of debt 2 days ago after i filled out taxes. the second mortage on line 2 says 35,525.80 the question is "do i need to report it on irs form 982" since it was part of a dil and was for house improvement? reading the publication it's really confusioning especially since my primary mortgage was cancelled "dil" and handed over to the va in 2009 "next filling year". being a split year process it is really confusing my wife and i and not sure what to do with reporting this to the irs. i assume both would be covered under that debt relief act everyone has been talking about that's good till the end of this year. any help on how we should proceed on this is so greatly appreciated.
Hi manningfamily,
As far as I know, you can get mortgage tax relief on certain conditions. Firstly, the debt should have been canceled in 2007, 2008 and 2009 by the lender. Secondly, you will have to prove that the debt was used to buy, build or improve a principal residence. Moreover, the second homes, rental property or vacations homes are not eligible for mortgage tax relief. Apart from these, the tax relief is limited to debt amount of $2 million.
If you fulfill these conditions, then you can apply for a mortgage debt relief. But I guess, you have already paid the taxes. In that case, you will have contact the IRS for refund. For this refund you may file the IRS form-982.
Thanks,
Jerry
As far as I know, you can get mortgage tax relief on certain conditions. Firstly, the debt should have been canceled in 2007, 2008 and 2009 by the lender. Secondly, you will have to prove that the debt was used to buy, build or improve a principal residence. Moreover, the second homes, rental property or vacations homes are not eligible for mortgage tax relief. Apart from these, the tax relief is limited to debt amount of $2 million.
If you fulfill these conditions, then you can apply for a mortgage debt relief. But I guess, you have already paid the taxes. In that case, you will have contact the IRS for refund. For this refund you may file the IRS form-982.
Thanks,
Jerry
No I didn't send any money to the IRS yet, tax just on the 35,525 is alot of cash I can't just shell out. How would I apply for this debt relief especially since I would only be claiming the second mortage on the 2008 taxes and then next year the main mortgage since we just did the DIL a few weeks ago. I'm hopeing since the house was handed over to the VA by the bank that this will be even a easier process.
As you have not paid the taxes yet, you can fill out the form 982 now and sublit it to the IRS. But you can also contact a tax adviser who can also help you out in this case.