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USTaxAdvising
USTaxAdvising, Accountant
Category: Capital Gains and Losses
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Experience:  Professional in capital gains and finance related questions
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How do I figure capital gain on on foreclosure?

Customer Question

How do I figure capital gain on on foreclosure?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  USTaxAdvising replied 1 year ago.
Hello, Basically your sales proceeds minus your cost to purchase the home (+any improvements) will be your gain on sale. This may or may not be excludable from taxable income. Generally, if you have lived in the home for two out of the last five years as your primary residence you can exclude up to 250K (or 500K if married filing jointly) of the taxable gain. See some more information here - http://www.irs.gov/taxtopics/tc701.html Next if your mortgage was cancelled you may have Cancellation of Indebtedness Income ("COD"). You may also qualify for The Mortgage Forgiveness Debt Relief Act of 2007 where mortgage debt forgiven in connection with a foreclosure may be non taxable. See information here on COD income - http://www.irs.gov/uac/Home-Foreclosure-and-Debt-Cancellation I hope this provides the clarity you were looking for. Please let me know if you have any further questions and I will get back to you as soon as I can. Best regards,

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