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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I have a property that was part of a chapter 7 bk discharged

Customer Question

i have a property that was part of a chapter 7 bk discharged in 2011. the property was given up in the bk, the bank has not foreclosed . my bk attorney says that I can sell the property ( the proceeds go to the creditors). will i have to pay capital gains taxes on even though the proceeds of the sale go to the creditors
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!That is correct - if the property is sold - and there is a gain on such disposition - that gain is taxable.However - if the property is your personal residence - under some circumstances such gain may be excluded from taxable income.
Customer: replied 1 year ago.
is that true if is sold through foreclosure
Expert:  Lev replied 1 year ago.
Yes - that is true.Still - you own that property and you are responsible for the gain.Please be aware that the gain would be taxed on federal and state level.So regardless if the property is foreclosed or not - as the owner - you are still responsible for the gain.You may ask your attorney to withhold some taxes from proceeds and remit to taxing authorities.
Expert:  Lev replied 1 year ago.
Still - you own that property and you are responsible for the gain.
Please be aware that the gain would be taxed on federal and state level.
So regardless if the property is foreclosed or not - as the owner - you are still responsible for the gain.
You may ask your attorney to withhold some taxes from proceeds and remit to taxing authorities.
Individual federal income tax debt may be written off under some circumstances within the bankruptcy procedure.
If the income tax debt meets all five of these rules, then the tax debt is discharged in bankruptcy petitions.
The due date for filing a tax return is at least three years ago.
The tax return was filed at least two years ago.
The tax assessment is at least 240 days old.
The tax return was not fraudulent.
The taxpayer is not guilty of tax evasion.
Let me know if you need any clarification this matter.
Sorry if you expected differently.