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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37832
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I filed bannkruptsy in 2009, included one particular rental

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I filed bannkruptsy in 2009, included one particular rental property which I am no longer responsible for in the bankruptsy. In 2011, with my cooperation with the bank, the property successfully shortsaled. My question is, can I report the sale of the home on my taxes? By doing this, I would show a loss on the property, ultimatley gaining the tax benefits of deprication recapture, which reduces my tax liability for the year significantly. Is this possible?

If the property was a rental, and the bankruptcy trustee abandoned it back to you at the close of your bankruptcy (which occurs automatically, if the trustee fails to liquidate the property in Chapter 7), then it's your property and you can treat it the same as you would any other property for tax purposes.

Hope this helps.

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Customer: replied 3 years ago.
Since I was discharged with the bankruptcy in 2009 and the property did not shortsale until August of 2011 (with my cooperation of course and with me signing off on the deed) would that imply that the trustee abandoned the property? Since I worked alone (with the bank after discharge without the trustee) does it appear that this is the case?
If the trustee had "not" abandoned the property to you, then it would have been sold by the trustee, not by your short sale. So, yes, the implication is that the trustee abandoned the property to you, principally because it had no equity value to the estate.

Hope this helps.
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