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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 15831
Experience:  10 years experience
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Hi, my husband died two years ago. We had a rental in Calif.

Customer Question

Hi, my husband died two years ago. We had a rental in Calif. that was underwater. When my husband last refinanced, he was the only one to sign the mortgage. After my husband died, I received advice to let the home go from my tax man and a financial advisor. When the home foreclosed, I was not expected to make up the difference because it was in Calif. My tax man says I will need to pay Federal tax and Calif. state tax because of the foreclosure, if Calif. doesn't expect state tax then Idaho, where I live now, will expect tax because of foreclosure. Do I need to pay extra taxes because of the foreclosure even though I didn't sign the mortgage? Thank you for your help.
Linda
Submitted: 1 year ago.
Category: Tax
Expert:  Wallstreet Esq. replied 1 year ago.

Wallstreet Esq. :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarification

Wallstreet Esq. :

If the property was a rental home and not a primary home, their would be a 1099c for the canceled debt, and you would be liable.

Wallstreet Esq. :

If you did not sign the mortgage, '

Wallstreet Esq. :

only your husbands Estate would be liable,

Wallstreet Esq. :

however, since CA is a community property State, regardless of you signing the mortgage,

Wallstreet Esq. :

it is possible for the lender to sue you for the debt,

Wallstreet Esq. :

and issue you a 1099c, if you are given a 1099c cancellation of debt, you would be liable

Wallstreet Esq. :

Only because CA is a community property State.

Wallstreet Esq. :

Idaho is not a community property State, so if that is your residence, your spouses debt would not be yours,

Wallstreet Esq. :

In terms of Federal taxes, you would only have to pay it if you owed the debt,

Wallstreet Esq. :

if you were not on the mortgage, you would not have the liability, unless community property rules, and a 1099c is issued in your name,

Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 15831
Experience: 10 years experience
Wallstreet Esq. and 6 other Tax Specialists are ready to help you
Expert:  Wallstreet Esq. replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Customer: replied 1 year ago.

Regarding the Federal tax part, because Calif. is a community property state I will be liable for the Federal tax? I did receive a 1099c that said something like Linda Halberg Estate of Rick Halberg.

Expert:  Wallstreet Esq. replied 1 year ago.
If their was no EState you would not be liable as the form stated the Estate if their was an Estate the EState would be liable not you personally
Customer: replied 1 year ago.

We have no estate except that I am receiving my husband's pension from the State of Calif. The house we bought here is underwater and I only own two cars that are worth $1000 each. Does the pension make me liable?

Expert:  Wallstreet Esq. replied 1 year ago.
If their is no estate you should not be personally liable, the pension would not make you liable
Customer: replied 1 year ago.

One more question, if my tax man wants to contact you would he be able to and how would he do it? Thank you.

Expert:  Wallstreet Esq. replied 1 year ago.
he would have to ask a question here, also be aware I am going by the 1099c that was sent to you, if the 1099c was to the Estate, the Estate is liable.
Customer: replied 1 year ago.

Thank you for your service. I was going to rate to finish a second time but a notice came up telling me if I did, I would pay again. Again thank you for your help. Linda

Expert:  Wallstreet Esq. replied 1 year ago.
good luck, and thank you

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