How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Marvin,EA Your Own Question

Marvin,EA
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1663
Experience:  Enrolled to Represent Taxpayers Before The IRS
9313471
Type Your Tax Question Here...
Marvin,EA is online now
A new question is answered every 9 seconds

I bought an investment condo in 2005 for $500,000 and 10% down.

Customer Question

I bought an investment condo in 2005 for $500,000 and 10% down. I am unable to make payments and it is in foreclosure. When the bank eventually sells the condo (for about $200,000) will I have a tax liability? ($450,000 1st and 2nd MINUS $200,000 sales price)
Submitted: 5 years ago.
Category: Tax
Expert:  Marvin,EA replied 5 years ago.
Hello and thanks you for using Just Answer. The Mortgage Debt Relief Act of 2007 excludes from income any indebtedness discharged that is "qualified Principal residence indebtedness"   This is defined as acquisition indebtedness associated with a taxpayer's principal residence. The ceiling on acquisition for this relief purpose is $ 2,000,000. You will not have a tax liability of $450,000 to report on your federal income tax
Customer: replied 5 years ago.

This Condo was an investment and I have never lived there. My accountant seems to think that I won't have a tax liability but I don't trust his judgement.

Many thanks

Expert:  Marvin,EA replied 5 years ago.
If there is a loss on the sale of property the lenders will issue Form 1099-A, Acquisition or abandonment of Secured Property or Form 1099-C, Cancellation of Debt. These forms include information for you to se in calculation gain, loss or income from cancellation of debt. Any investment-use sale property is reported on Schedule D.   Generally, debt forgiveness is taxable unless you are insolvent.
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1663
Experience: Enrolled to Represent Taxpayers Before The IRS
Marvin,EA and 5 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

Hello Marvin,

I understand about the 1099's that will be issued. I have been a Realtor for 18 years. BUT in my particular situation - I bought an investment condo in 2005 for $500,000 and 10% down. I am unable to make payments and it is in foreclosure. When the bank eventually sells the condo (for about $200,000) will I have a tax liability? ($450,000 1st and 2nd MINUS $200,000 sales price) will I have any tax liability? The 1099 will probably be for around $250,000 - the total debt of $450,000 MINUS the probable sales price of $200,000. My tax BASIS on this home is $500,000, the purchase price in 2005.

 

I have accepted this answer but would appreciate an knowing if I will owe tax.

Expert:  Marvin,EA replied 5 years ago.
If you receive a 1099-A for $250,000 and you are not insolvent you must add the amount to your tax return. If you are insolvent for 2008 you should be able to exclude the amount from your tax return. You can read more about insolvent at www.irs.gov/pub/irs-pdf/f982.pdf page 3 Part I

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.