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I live in the state of Nevada, and my rental property foreclosed.

Resolved Question:

I live in the state of Nevada, and my rental property foreclosed. I received a 1099-A from the 1st lender and the outstanding principal is $306,000. But the fair market value is listed as $341,761. Does that mean I don't have a tax liability because the FMV is not lower than the outstanding principal? Meaning there's no "ordinary income" because the FMV listed is higher than the cancelled debt????
Submitted: 3 years ago.
Category: Finance
Expert:  Taxtom replied 3 years ago.

Taxtom :

Hello, How much did the property sell for? How much did you originally pay for the property. Thanks Tom

Expert:  Taxtom replied 3 years ago.
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Customer: replied 3 years ago.
Total purchase price was $382,500. First loan was interest only for $306,000. As I research more I am realizing that the 1099A is more of an announcement of foreclosure to the IRS, and it seems I have to sit and wait for a 1099C or for legal action from the lender. Am I on the right track? To my knowledge the bank still has the home....hasn't sold it yet.
Expert:  Taxtom replied 3 years ago.
Hello, That is actually what I was going to tell you, you will need to wait. The good news of the notification is that if the FMV at time of bank taking possesion was less than you paid for the property means that you will not have to pay taxes on a capital gain on the property but may still have to pay taxes on the forgiveness of debt. Thanks Tom
Taxtom, Accountant
Category: Finance
Satisfied Customers: 2342
Experience: 25 Years in preparing Personal and Business Tax Retuns
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