Jax Tax : First, you must determine what form to use. If a business or fetal property the sell is reported on form 4797 then flowing to schedule D. If not, of is simply reported on sch D.
Jax Tax : The amount reported is the sales price ( amount cancelled ) against your basis in the property.
Jax Tax : This will determine the gain.
This was not a business..it was a lot I bought, hoping to build on..so I am liable for the $4,000.00??, not difference between the $386.9K and the $4K???
Jax Tax : Neither is your liability. It is reported as a sale of property and possibly a cancellation of debt if it was a recourse loan.
Jax Tax : The sale price is the $386k and you offset this with your basis. You could have a gain or loss depending on your basis in the property. There is one other issue that may effect basis.
Jax Tax : If the bank has (likely) canceled the balance due, you may have a cancellation of date income on the $386k.
Jax Tax : Of you qualify on form 982 for the insolvency exception to cancellation of debt and you do not have to report the $386k as income, you will have to reduce your basis in the property by the amount excluded from income.
Jax Tax : Then, your basis would be your current basis less the $386k. Then when compared to the sale price you may have capital gain.
Jax Tax : This is a complicated process of determining the outcome, but if you give me your current basis in the property, I will give you an exact number.
I put down $42,000 on the original sales price of $429,000 and paid $67,000 in interest and $18,000 in property tax before stopping payments.
Jax Tax : Give me some time to run the numbers. It may take some time but wanna make sure it is correct.
Jax Tax : Unfortinatley it is complex.